ANNUAL REPORT October 31, 2002
Nuveen
Municipal Closed-End
Exchange-Traded
Funds
INSURED QUALITY
NQI
INSURED OPPORTUNITY
NIO
PREMIER INSURED
INCOME
NIF
INSURED PREMIUM
INCOME 2
NPX
INSURED DIVIDEND
ADVANTAGE
NVG
PHOTO OF: 2 WOMAN ON GRADUATION DAY.
PHOTO OF: MAN AND CHILD SEATED BY LAPTOP COMPUTER.
Dependable,
tax-free income
because
it's not what you earn,
it's what you keep.(R)
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Chairman of the Board
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Dear
SHAREHOLDER
Once again, I am pleased to state that during the period covered by this report
your Nuveen Fund continued to meet its objective of providing attractive
tax-free monthly income. Detailed information on your Fund's performance can be
found in the Portfolio Manager's Comments and on the Performance Overview pages
within this report. Please take the time to read them.
In addition to providing regular tax-free income, we believe that a municipal
bond investment like your Nuveen Fund also may offer opportunities to reduce the
risk of your overall investment portfolio. This is because the prices of
municipal bonds may move differently than the prices of the common stocks,
mutual funds or other investments you may own. Since one part of your portfolio
may be going up when another is going down, portfolio diversification may reduce
your overall risk. Your financial advisor can explain the advantages of
portfolio diversification in more detail. I urge you to contact him or her soon
for more information on this important investment strategy.
I also urge you to consider receiving future Fund reports and other Fund
information through the Internet and by e-mail rather than in hard copy. Not
only will you be able to receive the information faster, but this also may help
lower your Fund expenses. Sign up is quick and easy -- see the inside front
cover of this report for step-by-step instructions.
For more than 100 years, Nuveen has specialized in offering quality investments
such as your Nuveen Fund to those seeking to accumulate and preserve wealth. Our
commitment to careful research, constant surveillance and judicious trading by
our seasoned portfolio management team has never been stronger. Our mission
continues to be to assist you and your financial advisor by offering the
investment solutions and services that can help you meet your financial
objectives. We thank you for choosing us as a partner as you work toward that
goal.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
December 16, 2002
1
Nuveen National Insured Municipal Closed-End Exchange-Traded Funds (NQI, NIO,
NIF, NPX, NVG)
Portfolio Manager's
COMMENTS
Portfolio manager Steve Krupa discusses U.S. economic conditions, key investment
strategies, and the recent performance of these Insured Funds. With 23 years of
investment experience at Nuveen, Steve assumed portfolio management
responsibility for NQI in 1990, NIO in 1991, NIF and NPX in 1998, and NVG upon
its inception in March 2002.
WHAT WERE THE MAJOR FACTORS AFFECTING THE U.S. ECONOMY AND THE MUNICIPAL MARKET
DURING THIS REPORTING PERIOD?
In a number of ways, market conditions have not changed significantly since our
last shareholder report.
We believe the most influential factors affecting the economy and the municipal
market continued to be the slow pace of economic growth and the relatively low
levels of interest rates. In addition, the ongoing threat of terrorism and the
current uncertain geopolitical climate also had an impact on the economy and the
markets over this reporting period.
Looking more closely at the municipal market, the sluggish economic recovery and
lack of inflationary pressures helped many bonds perform well during most of the
twelve-month period that ended October 31, 2002. However, during the month of
October 2002, the market environment for all fixed-income investments soured as
a rally in the equity markets seemingly caused some investors to sell
fixed-income products and purchase common stocks.
In the first ten months of 2002, new municipal bond issuance nationwide reached
$289.4 billion, an increase of 30% over January-October 2001. Demand for
municipal bonds also remained strong over most of this period, as many
individual investors continued to seek investments offering diversification for
their portfolios and tax-free income. In addition, institutional investors,
especially traditional municipal bond purchasers such as property/casualty
insurance companies, have been active buyers in the municipal market.
HOW DID THESE FUNDS PERFORM OVER THE TWELVE MONTHS ENDED OCTOBER 31, 2002?
The price spread between AAA rated bonds and lower rated bonds grew through much
of this reporting period. This helped insured bonds and insured funds post
generally strong total returns over the twelve months ended October 31, 2002.
Individual results for Nuveen's insured Funds, as well as for relevant
benchmarks, are presented in the accompanying table.
TOTAL RETURN LEHMAN LIPPER
MARKET YIELD ON NAV TOTAL RETURN1 AVERAGE2
------------------------------------------------------------------------------
1 YEAR 1 YEAR 1 YEAR
TAXABLE- ENDED ENDED ENDED
10/31/02 EQUIVALENT3 10/31/02 10/31/02 10/31/02
------------------------------------------------------------------------------
NQI 6.17% 8.81% 6.83% 6.16% 6.27%
------------------------------------------------------------------------------
NIO 6.31% 9.01% 7.01% 6.16% 6.27%
------------------------------------------------------------------------------
NIF 6.30% 9.00% 6.57% 6.16% 6.27%
------------------------------------------------------------------------------
NPX 6.14% 8.77% 7.83% 6.16% 6.27%
------------------------------------------------------------------------------
NVG 6.22% 8.89% NA - -
------------------------------------------------------------------------------
Past performance is not predictive of future results.
For additional information, see the individual Performance Overview for your
Fund in this report.
1 The total annual returns on common share net asset value for these insured
Funds are compared with the total annual return of the Lehman Brothers
Insured Municipal Bond Index, an unleveraged index comprising a broad range
of insured municipal bonds. Results for the Lehman index do not reflect any
expenses.
2 The Funds' total returns are compared with the average annualized return of
the 22 funds in the Lipper Insured Leveraged Municipal Debt Funds category.
Fund and Lipper returns assume reinvestment of dividends.
3 The taxable-equivalent yield represents the yield that must be earned on a
taxable investment in order to equal the yield of the Nuveen Fund on an
after-tax basis. The taxable-equivalent yield is based on the Fund's market
yield on the indicated date and a federal income tax rate of 30%.
2
All four of the Funds with at least one year's history reported strong total
returns for the year ended October 31, 2002. Each exceeded the Lipper peer group
average return and the return of the unleveraged, unmanaged Lehman Insured
Municipal Index.
We believe part of this outperformance can be attributed to each Fund's
significant holding of transportation bonds. Over the past year, many insured
bonds in this area performed well as some investors tended to switch out of
uninsured transportation bonds into insured bonds within this same sector. Each
of the older Funds also had sizeable holdings of healthcare bonds, which saw a
similar migration from uninsured to insured bonds over the course of the
reporting period.
NVG was introduced in March 2002, and since then has offered its
MuniPreferred(R), shares, completed its initial investment process, and begun
paying regular monthly dividends. We are pleased with the composition of the
portfolio and how the Fund has performed to date, and we look forward to sharing
first year results with you in the next shareholder report.
HOW DID THE MARKET ENVIRONMENT AFFECT THE DIVIDENDS AND SHARE PRICES OF THESE
FUNDS?
As the Fed continued to keep short-term interest rates relatively low, the
dividend-paying capabilities of these Funds benefited from their use of
leverage, a strategy that can potentially enhance the dividends paid to common
shareholders. This benefit is tied in part to the short-term rates the leveraged
Funds pay their MuniPreferred(R) shareholders. Low short-term rates, such as
those currently in effect, can enable the Funds to reduce the amount of income
they pay preferred shareholders, leaving more earnings to support common share
dividends.
During the fiscal year ended October 31, 2002, low short-term interest rates
enabled us to implement four dividend increases in all four of the older Funds.
NVG has paid a stable, attractive monthly dividend since its first distribution
in June.
Given the volatility of the equity market over the past year, we believe
investors continued to evaluate their asset allocation plans and make slow
shifts to take better advantage of the balance offered by fixed-income
investments. Over this period, the share prices of the four older Funds
3
stayed roughly flat or rose modestly. NVG's share price remained fairly stable
until October, when it was affected by the general weakening of bond prices. As
of October 31, 2002, all of these Funds were trading at modest discounts to
their common share net asset values (see charts on individual Performance
Overview pages).
WHAT KEY STRATEGIES WERE USED TO MANAGE THESE FUNDS DURING THE FISCAL YEAR ENDED
OCTOBER 31, 2002?
We believed that all these Funds were well positioned at the start of this
reporting period; therefore, trading activity was fairly minimal over the fiscal
year. As opportunities arose, our strategic focus continued to be on enhancing
dividend-paying capability, extending call protection and purchasing bonds that
we thought were undervalued by the market, particularly in the 20-year part of
the yield curve. We think that as we add these relatively shorter maturities to
the Funds their portfolios should become less sensitive to potential changes in
the interest rates. At the same time, we believe that adding bonds from this
part of the yield curve will allow us to continue providing competitive yields
and returns.
As noted earlier, transportation bonds remain one of the top sector holdings
within each Fund. We do not anticipate this will change dramatically in the
coming months. We believe there will continue to be a steady supply of insured
airport and airline-backed bonds that can provide value investing opportunities.
Given the current geopolitical and economic climate, we think strong credit
quality remained a requirement for many investors. Each of the four older
insured Funds is 100% invested in insured and/or U.S. guaranteed securities,
which means that credit quality is not an issue. NVG, which can invest up to 20%
of its assets in uninsured, investment-grade quality bonds, was 92% invested in
insured or AAA rated securities as of October 31. The balance of the portfolio
was in bonds rated AA. One of this Fund's investments - sewer bonds issued by
Jefferson County, Alabama - already has been advance refunded, resulting in
price appreciation. NIO also has benefited from the advance refunding of this
issue.
WHAT IS YOUR OUTLOOK FOR THE MUNICIPAL MARKET IN GENERAL AND THESE FUNDS IN
PARTICULAR?
In general, our outlook for the fixed-income markets over the coming months
remains positive. We believe
4
the U.S. economy is headed for an eventual recovery, but one that may be slower
to arrive and less robust than some are now predicting. We expect inflation and
interest rates to remain relatively low over the near term, while new municipal
volume should continue to be strong as issuers take advantage of the low rate
environment for both new issues and refinancings. Currently, national issuance
totals are on pace to surpass $300 billion in 2002, eclipsing the record of $292
billion set in 1993. We also expect demand for tax-exempt municipal bonds to
remain solid as investors continue to look for ways to rebalance their
portfolios and reduce their overall investment risk.
Over the next two years, we believe these Funds offer excellent levels of call
protection, with exposures during 2003 and 2004 ranging from zero in NVG to 16%
in NPX. The number of actual calls experienced by these Funds will depend
largely on market interest rates over this time. We believe this call exposure
is manageable, and we foresee no problems in working through it.
In the coming months, our focus will remain on strategies that utilize Nuveen's
experience and research expertise to try to enhance the Funds' dividend-paying
capabilities, position the Funds for future interest rate moves and take
advantage of value opportunities as they arise. We believe the continued heavy
issuance anticipated in the municipal market should enhance our ability to find
attractive supply-driven trading opportunities. Overall, we believe the
attractive tax-free income, portfolio diversification, and risk reduction
potential (for equity-dominated portfolios) represented by these Funds will
continue to make them potentially valuable components in your long-term
financial plans.
5
Nuveen Insured Quality Municipal Fund, Inc.
Performance
OVERVIEW As of October 31, 2002
NQI
CREDIT QUALITY
PIE CHART:
INSURED 89%
INSURED AND U.S. GUARANTEED 10%
U.S. GUARANTEED 1%
PORTFOLIO STATISTICS
--------------------------------------------------
Share Price $15.55
--------------------------------------------------
Common Share Net Asset Value $15.87
--------------------------------------------------
Market Yield 6.17%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 8.81%
--------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $601,495
--------------------------------------------------
Average Effective Maturity (Years) 22.43
--------------------------------------------------
Leverage-Adjusted Duration 8.53
--------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN (Inception 12/90)
--------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------
1-Year 10.82% 6.83%
--------------------------------------------------
5-Year 6.37% 6.59%
--------------------------------------------------
10-Year 7.08% 7.30%
--------------------------------------------------
TOP FIVE SECTORS (as a % of total investments)
--------------------------------------------------
Transportation 20%
--------------------------------------------------
Healthcare 16%
--------------------------------------------------
Utilities 14%
--------------------------------------------------
Tax Obligation/General 12%
--------------------------------------------------
U.S. Guaranteed 11%
--------------------------------------------------
BAR CHART:
2001-2002 MONTHLY TAX-FREE DIVIDENDS PER SHARE2
11/01 0.0715
12/01 0.074
1/02 0.074
2/02 0.074
3/02 0.076
4/02 0.076
5/02 0.076
6/02 0.0785
7/02 0.0785
8/02 0.0785
9/02 0.08
10/02 0.08
LINE CHART:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
11/1/01 15
15.08
14.48
14.5
14.47
14.52
14.25
14.14
14.45
14.76
14.79
15
15
15.05
15.13
15.15
15.19
15.3
15.06
14.89
14.35
14.7
14.75
14.8
14.75
15
15.22
15.19
15.26
15.16
15.3
15.32
15.63
15.65
15.76
15.87
16.1
15.87
15.91
15.95
16.11
16.05
15.88
16
16.13
16.21
16.24
16.3
16.39
16.08
15.26
10/31/02 15.19
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen Fund on an after-tax basis. It
is calculated using the current market yield and a federal income tax rate
of 30%.
2 The Fund also paid shareholders capital gains and net ordinary income
distributions in December 2001 of $0.0243 per share.
6
Nuveen Insured Municipal Opportunity Fund, Inc.
Performance
OVERVIEW As of October 31, 2002
NIO
CREDIT QUALITY
PIE CHART:
INSURED 87%
INSURED AND U.S. GUARANTEED 12%
U.S. GUARANTEED 1%
PORTFOLIO STATISTICS
--------------------------------------------------
Share Price $15.21
--------------------------------------------------
Common Share Net Asset Value $15.83
--------------------------------------------------
Market Yield 6.31%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 9.01%
--------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $1,283,353
--------------------------------------------------
Average Effective Maturity (Years) 22.10
--------------------------------------------------
Leverage-Adjusted Duration 9.82
--------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN (Inception 9/91)
--------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------
1-Year 9.80% 7.01%
--------------------------------------------------
5-Year 5.72% 6.31%
--------------------------------------------------
10-Year 7.63% 7.56%
--------------------------------------------------
TOP FIVE SECTORS (as a % of total investments)
--------------------------------------------------
Transportation 22%
--------------------------------------------------
U.S. Guaranteed 13%
--------------------------------------------------
Healthcare 12%
--------------------------------------------------
Tax Obligation/Limited 11%
--------------------------------------------------
Utilities 10%
--------------------------------------------------
BAR CHART:
2001-2002 MONTHLY TAX-FREE DIVIDENDS PER SHARE2
11/01 0.0735
12/01 0.075
1/02 0.075
2/02 0.075
3/02 0.0765
4/02 0.0765
5/02 0.0765
6/02 0.079
7/02 0.079
8/02 0.079
9/02 0.08
10/02 0.08
LINE CHART:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
11/1/01 14.93
14.92
14.48
14.21
14.6
14.36
14.29
14.26
14.39
14.47
14.6
14.94
14.88
14.92
15.07
15.02
15.14
15.02
14.79
14.62
14.35
14.62
14.67
14.75
14.7
14.82
15.11
15
14.85
15.01
15.1
15.18
15.04
15.3
15.53
15.6
15.73
15.68
15.3
15.78
15.81
15.65
15.79
15.81
15.89
15.84
15.89
15.96
16.15
15.75
14.89
10/31/02 15.17
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen Fund on an after-tax basis. It
is calculated using the current market yield and a federal income tax rate
of 30%.
2 The Fund also paid shareholders capital gains and net ordinary income
distributions in December 2001 of $0.0180 per share.
7
Nuveen Premier Insured Municipal Income Fund, Inc.
Performance
OVERVIEW As of October 31, 2002
NIF
CREDIT QUALITY
PIE CHART:
INSURED 80%
INSURED AND U.S. GUARANTEED 6%
U.S. GUARANTEED 14%
PORTFOLIO STATISTICS
--------------------------------------------------
Share Price $15.33
--------------------------------------------------
Common Share Net Asset Value $15.59
--------------------------------------------------
Market Yield 6.30%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 9.00%
--------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $301,121
--------------------------------------------------
Average Effective Maturity (Years) 18.33
--------------------------------------------------
Leverage-Adjusted Duration 9.02
--------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN (Inception 12/91)
--------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------
1-Year 6.84% 6.57%
--------------------------------------------------
5-Year 5.84% 5.85%
--------------------------------------------------
10-Year 7.44% 7.41%
--------------------------------------------------
TOP FIVE SECTORS (as a % of total investments)
--------------------------------------------------
Transportation 20%
--------------------------------------------------
U.S. Guaranteed 19%
--------------------------------------------------
Healthcare 15%
--------------------------------------------------
Tax Obligation/Limited 14%
--------------------------------------------------
Tax Obligation/General 12%
--------------------------------------------------
BAR CHART:
2001-2002 MONTHLY TAX-FREE DIVIDENDS PER SHARE
11/01 0.075
12/01 0.0765
1/02 0.0765
2/02 0.0765
3/02 0.0785
4/02 0.0785
5/02 0.0785
6/02 0.0795
7/02 0.0795
8/02 0.0795
9/02 0.0805
10/02 0.0805
LINE CHART:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
11/1/01 15.3
15.15
14.63
14.59
14.85
14.66
14.63
14.78
14.9
14.75
14.88
15.27
15.2
15.34
15.5
15.4
15.37
15.26
15.2
14.6
14.71
14.85
14.89
15.16
14.95
15.07
15.25
15.32
15.35
15.32
15.27
15.31
15.24
15.62
15.68
15.85
15.9
15.89
15.9
15.9
15.98
15.75
15.75
15.76
15.99
15.9
15.94
15.9
16.12
16
15.2
10/31/02 15.32
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen Fund on an after-tax basis. It
is calculated using the current market yield and a federal income tax rate
of 30%.
8
Nuveen Insured Premium Income Municipal Fund 2
Performance
OVERVIEW As of October 31, 2002
NPX
CREDIT QUALITY
PIE CHART:
INSURED 92%
INSURED AND U.S. GUARANTEED 8%
PORTFOLIO STATISTICS
--------------------------------------------------
Share Price $13.77
--------------------------------------------------
Common Share Net Asset Value $14.17
--------------------------------------------------
Market Yield 6.14%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 8.77%
--------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $527,800
--------------------------------------------------
Average Effective Maturity (Years) 18.05
--------------------------------------------------
Leverage-Adjusted Duration 7.03
--------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN (Inception 7/93)
--------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------
1-Year 6.32% 7.83%
--------------------------------------------------
5-Year 8.22% 6.56%
--------------------------------------------------
Since Inception 5.15% 5.79%
--------------------------------------------------
TOP FIVE SECTORS (as a % of total investments)
--------------------------------------------------
Utilities 26%
--------------------------------------------------
Transportation 15%
--------------------------------------------------
Healthcare 12%
--------------------------------------------------
Tax Obligation/Limited 11%
--------------------------------------------------
Housing/Multifamily 10%
--------------------------------------------------
BAR CHART:
2001-2002 MONTHLY TAX-FREE DIVIDENDS PER SHARE
11/01 0.0655
12/01 0.0665
1/02 0.0665
2/02 0.0665
3/02 0.0685
4/02 0.0685
5/02 0.0685
6/02 0.0695
7/02 0.0695
8/02 0.0695
9/02 0.0705
10/02 0.0705
LINE CHART:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
11/1/01 13.8
13.78
13.63
13.56
13.67
13.44
13.02
12.85
13.28
13.35
13.3
13.49
13.38
13.59
13.62
13.67
13.74
13.68
13.15
13.06
12.91
13.01
13.1
13.35
13.36
13.4
13.45
13.68
13.52
13.61
13.62
13.74
13.8
13.9
13.93
13.99
14.26
14.06
13.77
14
14.2
14.05
14.15
14.23
14.19
14.2
14.19
14.27
14.4
14.18
13.62
10/31/02 13.53
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen Fund on an after-tax basis. It
is calculated using the current market yield and a federal income tax rate
of 30%.
9
Nuveen Insured Dividend Advantage Municipal Fund
Performance
OVERVIEW As of October 31, 2002
NVG
CREDIT QUALITY
PIE CHART:
INSURED 84%
INSURED AND U.S. GUARANTEED 2%
NOT INSURED 14%
PORTFOLIO STATISTICS
--------------------------------------------------
Share Price $14.96
--------------------------------------------------
Common Share Net Asset Value $15.35
--------------------------------------------------
Market Yield 6.22%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 8.89%
--------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $457,432
--------------------------------------------------
Average Effective Maturity (Years) 24.94
--------------------------------------------------
Leverage-Adjusted Duration 11.68
--------------------------------------------------
CUMULATIVE TOTAL RETURN (Inception 3/02)
--------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------
Since Inception 2.84% 10.44%
--------------------------------------------------
TOP FIVE SECTORS (as a % of total investments)
--------------------------------------------------
Tax Obligation/General 23%
--------------------------------------------------
Transportation 21%
--------------------------------------------------
Education and Civic Organizations 15%
--------------------------------------------------
Water and Sewer 11%
--------------------------------------------------
Tax Obligation/Limited 10%
--------------------------------------------------
BAR CHART:
2002 MONTHLY TAX-FREE DIVIDENDS PER SHARE
5/02 0.0775
6/02 0.0775
7/02 0.0775
8/02 0.0775
9/02 0.0775
10/02 0.0775
LINE CHART:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
3/28/02 15.02
15
15.01
15
15.02
15.03
15.01
15.06
15.11
15.11
15.12
15.06
14.91
14.98
15.07
15.15
15.18
15.14
15.16
15.19
15.4
15.07
15.37
15.21
15.4
15.46
15.55
15.44
15.35
14.83
10/31/02 14.5
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen Fund on an after-tax basis. It
is calculated using the current market yield and a federal income tax rate
of 30%.
10
Shareholder
MEETING REPORT
The annual shareholder meeting was held on July 31, 2002, at the Northern Trust
Bank, Chicago, Illinois.
NQI
------------------------------------------------------------------------------------------------------------------------------------
APPROVAL OF THE BOARD MEMBERS WAS REACHED AS FOLLOWS:
Preferred Preferred Preferred Preferred Preferred
Common Shares Shares Shares Shares Shares
Shares Series-M Series-T Series-W Series-TH Series-F
====================================================================================================================================
Robert P. Bremner
For 32,999,454 2,483 2,413 2,240 2,196 2,408
Withhold 358,600 -- -- 4 5 5
------------------------------------------------------------------------------------------------------------------------------------
Total 33,358,054 2,483 2,413 2,244 2,201 2,413
====================================================================================================================================
Lawrence H. Brown
For 33,042,091 2,483 2,413 2,240 2,196 2,408
Withhold 315,963 -- -- 4 5 5
------------------------------------------------------------------------------------------------------------------------------------
Total 33,358,054 2,483 2,413 2,244 2,201 2,413
====================================================================================================================================
Anne E. Impellizzeri
For 33,007,622 2,483 2,413 2,236 2,196 2,408
Withhold 350,432 -- -- 8 5 5
------------------------------------------------------------------------------------------------------------------------------------
Total 33,358,054 2,483 2,413 2,244 2,201 2,413
====================================================================================================================================
Peter R. Sawers
For 33,040,969 2,483 2,413 2,240 2,196 2,408
Withhold 317,085 -- -- 4 5 5
------------------------------------------------------------------------------------------------------------------------------------
Total 33,358,054 2,483 2,413 2,244 2,201 2,413
====================================================================================================================================
Judith M. Stockdale
For 33,022,484 2,483 2,413 2,236 2,196 2,408
Withhold 335,570 -- -- 8 5 5
------------------------------------------------------------------------------------------------------------------------------------
Total 33,358,054 2,483 2,413 2,244 2,201 2,413
====================================================================================================================================
William J. Schneider
For -- 2,483 2,413 2,240 2,196 2,408
Withhold -- -- -- 4 5 5
------------------------------------------------------------------------------------------------------------------------------------
Total -- 2,483 2,413 2,244 2,201 2,413
====================================================================================================================================
Timothy R. Schwertfeger
For -- 2,483 2,413 2,240 2,196 2,408
Withhold -- -- -- 4 5 5
------------------------------------------------------------------------------------------------------------------------------------
Total -- 2,483 2,413 2,244 2,201 2,413
====================================================================================================================================
11
Shareholder MEETING REPORT (continued)
NIO
------------------------------------------------------------------------------------------------------------------------------------
APPROVAL OF THE BOARD MEMBERS WAS REACHED AS FOLLOWS:
Preferred Preferred Preferred Preferred Preferred Preferred Preferred
Common Shares Shares Shares Shares Shares Shares Shares
Shares Series-M Series-T Series-W Series-W2 Series-TH Series-TH2 Series-F
------------------------------------------------------------------------------------------------------------------------------------
Robert P. Bremner
For 73,520,624 3,750 3,835 3,791 3,168 3,796 3,773 3,770
Withhold 765,539 45 41 18 -- 5 27 2
------------------------------------------------------------------------------------------------------------------------------------
Total 74,286,163 3,795 3,876 3,809 3,168 3,801 3,800 3,772
====================================================================================================================================
Lawrence H. Brown
For 73,576,919 3,790 3,875 3,791 3,168 3,796 3,773 3,770
Withhold 709,244 5 1 18 -- 5 27 2
------------------------------------------------------------------------------------------------------------------------------------
Total 74,286,163 3,795 3,876 3,809 3,168 3,801 3,800 3,772
====================================================================================================================================
Anne E. Impellizzeri
For 73,505,334 3,790 3,875 3,791 3,168 3,796 3,773 3,770
Withhold 780,829 5 1 18 -- 5 27 2
------------------------------------------------------------------------------------------------------------------------------------
Total 74,286,163 3,795 3,876 3,809 3,168 3,801 3,800 3,772
====================================================================================================================================
Peter R. Sawers
For 73,521,489 3,790 3,875 3,791 3,168 3,796 3,773 3,770
Withhold 764,674 5 1 18 -- 5 27 2
------------------------------------------------------------------------------------------------------------------------------------
Total 74,286,163 3,795 3,876 3,809 3,168 3,801 3,800 3,772
====================================================================================================================================
Judith M. Stockdale
For 73,547,105 3,750 3,835 3,791 3,168 3,796 3,773 3,770
Withhold 739,058 45 41 18 -- 5 27 2
------------------------------------------------------------------------------------------------------------------------------------
Total 74,286,163 3,795 3,876 3,809 3,168 3,801 3,800 3,772
====================================================================================================================================
William J. Schneider
For -- 3,790 3,875 3,791 3,168 3,796 3,773 3,770
Withhold -- 5 1 18 -- 5 27 2
------------------------------------------------------------------------------------------------------------------------------------
Total -- 3,795 3,876 3,809 3,168 3,801 3,800 3,772
====================================================================================================================================
Timothy R. Schwertfeger
For -- 3,790 3,875 3,791 3,168 3,796 3,773 3,770
Withhold -- 5 1 18 -- 5 27 2
------------------------------------------------------------------------------------------------------------------------------------
Total -- 3,795 3,876 3,809 3,168 3,801 3,800 3,772
====================================================================================================================================
12
NIF
------------------------------------------------------------------------------------------------------------------------------------
APPROVAL OF THE BOARD MEMBERS WAS REACHED AS FOLLOWS:
Preferred Preferred Preferred
Common Shares Shares Shares
Shares Series-W Series-TH Series-F
====================================================================================================================================
Robert P. Bremner
For 17,473,670 787 2,654 2,795
Withhold 167,578 12 -- 5
------------------------------------------------------------------------------------------------------------------------------------
Total 17,641,248 799 2,654 2,800
====================================================================================================================================
Lawrence H. Brown
For 17,473,293 787 2,654 2,795
Withhold 167,955 12 -- 5
------------------------------------------------------------------------------------------------------------------------------------
Total 17,641,248 799 2,654 2,800
====================================================================================================================================
Anne E. Impellizzeri
For 17,470,309 787 2,654 2,795
Withhold 170,939 12 -- 5
------------------------------------------------------------------------------------------------------------------------------------
Total 17,641,248 799 2,654 2,800
====================================================================================================================================
Peter R. Sawers
For 17,465,882 787 2,654 2,795
Withhold 175,366 12 -- 5
------------------------------------------------------------------------------------------------------------------------------------
Total 17,641,248 799 2,654 2,800
====================================================================================================================================
Judith M. Stockdale
For 17,475,950 787 2,654 2,795
Withhold 165,298 12 -- 5
------------------------------------------------------------------------------------------------------------------------------------
Total 17,641,248 799 2,654 2,800
====================================================================================================================================
William J. Schneider
For -- 787 2,654 2,795
Withhold -- 12 -- 5
------------------------------------------------------------------------------------------------------------------------------------
Total -- 799 2,654 2,800
====================================================================================================================================
Timothy R. Schwertfeger
For -- 787 2,654 2,795
Withhold -- 12 -- 5
------------------------------------------------------------------------------------------------------------------------------------
Total -- 799 2,654 2,800
====================================================================================================================================
13
Shareholder MEETING REPORT (continued)
NPX
------------------------------------------------------------------------------------------------------------------------------------
APPROVAL OF THE BOARD MEMBERS WAS REACHED AS FOLLOWS:
Preferred Preferred Preferred Preferred Preferred
Common Shares Shares Shares Shares Shares
Shares Series-M Series-T Series-W Series-TH Series-F
====================================================================================================================================
Robert P. Bremner
For 34,535,491 2,023 2,127 1,887 1,813 2,152
Withhold 347,446 10 3 40 55 2
------------------------------------------------------------------------------------------------------------------------------------
Total 34,882,937 2,033 2,130 1,927 1,868 2,154
====================================================================================================================================
Lawrence H. Brown
For 34,543,289 2,023 2,115 1,927 1,813 2,152
Withhold 339,648 10 15 -- 55 2
------------------------------------------------------------------------------------------------------------------------------------
Total 34,882,937 2,033 2,130 1,927 1,868 2,154
====================================================================================================================================
Anne E. Impellizzeri
For 34,517,012 2,023 2,115 1,927 1,813 2,152
Withhold 365,925 10 15 -- 55 2
------------------------------------------------------------------------------------------------------------------------------------
Total 34,882,937 2,033 2,130 1,927 1,868 2,154
====================================================================================================================================
Peter R. Sawers
For 34,509,684 2,023 2,127 1,927 1,813 2,152
Withhold 373,253 10 3 -- 55 2
------------------------------------------------------------------------------------------------------------------------------------
Total 34,882,937 2,033 2,130 1,927 1,868 2,154
====================================================================================================================================
Judith M. Stockdale
For 34,530,311 2,023 2,127 1,887 1,813 2,152
Withhold 352,626 10 3 40 55 2
------------------------------------------------------------------------------------------------------------------------------------
Total 34,882,937 2,033 2,130 1,927 1,868 2,154
====================================================================================================================================
William J. Schneider
For -- 2,023 2,127 1,927 1,813 2,152
Withhold -- 10 3 -- 55 2
------------------------------------------------------------------------------------------------------------------------------------
Total -- 2,033 2,130 1,927 1,868 2,154
====================================================================================================================================
Timothy R. Schwertfeger
For -- 2,023 2,127 1,927 1,813 2,152
Withhold -- 10 3 -- 55 2
------------------------------------------------------------------------------------------------------------------------------------
Total -- 2,033 2,130 1,927 1,868 2,154
====================================================================================================================================
14
Report of
INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS/TRUSTEES AND SHAREHOLDERS
NUVEEN INSURED QUALITY MUNICIPAL FUND, INC.
NUVEEN INSURED MUNICIPAL OPPORTUNITY FUND, INC.
NUVEEN PREMIER INSURED MUNICIPAL INCOME FUND, INC.
NUVEEN INSURED PREMIUM INCOME MUNICIPAL FUND 2
NUVEEN INSURED DIVIDEND ADVANTAGE MUNICIPAL FUND
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of Nuveen Insured Quality Municipal Fund, Inc.,
Nuveen Insured Municipal Opportunity Fund, Inc., Nuveen Premier Insured
Municipal Income Fund, Inc., Nuveen Insured Premium Income Municipal Fund 2 and
Nuveen Insured Dividend Advantage Municipal Fund as of October 31, 2002, and the
related statements of operations, changes in net assets and the financial
highlights for the periods indicated therein. These financial statements and
financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of investments owned as of October 31, 2002, by correspondence with
the custodian and brokers or by other appropriate auditing procedures where
replies from brokers were not received. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial positions of
Nuveen Insured Quality Municipal Fund, Inc., Nuveen Insured Municipal
Opportunity Fund, Inc., Nuveen Premier Insured Municipal Income Fund, Inc.,
Nuveen Insured Premium Income Municipal Fund 2 and Nuveen Insured Dividend
Advantage Municipal Fund at October 31, 2002, and the results of their
operations, changes in their net assets and financial highlights for the periods
indicated therein in conformity with accounting principles generally accepted in
the United States.
/s/Ernst & Young LLP
Ernst & Young LLP
Chicago, Illinois
December 11, 2002
15
Nuveen Insured Quality Municipal Fund, Inc. (NQI)
Portfolio of
INVESTMENTS October 31, 2002
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
ARIZONA - 3.3%
$ 9,200 City of Phoenix Civic Improvement Corporation, Arizona, Airport 7/12 at 100.00 AAA $ 9,335,148
Revenue Bonds, Series 2002B Senior Lien, 5.250%, 7/01/32
(Alternative Minimum Tax)
10,000 Industrial Development Authority of the County of Pima, Arizona, 1/03 at 101.00 AAA 10,358,000
Health Care System Revenue Bonds, Carondelet Health Services,
Inc., St. Joseph's and St. Mary's Hospitals and Health Centers Issue,
Series 1991, 6.750%, 7/01/16
------------------------------------------------------------------------------------------------------------------------------------
ARKANSAS - 1.4%
7,750 Arkansas Development Finance Authority, Single Family Mortgage 7/05 at 102.00 AAA 8,208,335
Revenue Bonds, 1995 Series B (Mortgage-Backed Securities
Program), 6.700%, 7/01/27 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA - 26.7%
8,370 Alameda County Public Facilities Corporation, California, 9/06 at 102.00 AAA 9,695,138
Certificates of Participation, Series 1991, 6.000%, 9/01/21
(Pre-refunded to 9/01/06)
12,695 Antioch Area Public Facilities Financing Agency, California, 2/03 at 102.00 AAA 12,811,540
Special Tax Bonds, Community Facilities District No. 1989-1,
5.000%, 8/01/18
13,175 California Pollution Control Financing Authority, Pollution Control 9/09 at 101.00 AAA 13,617,021
Revenue Refunding Bonds, Southern California Edison Company,
Series 1999A, 5.450%, 9/01/29
20,000 State of California, General Obligation Bonds, Series 2002, 10/12 at 100.00 AAA 20,042,600
5.000%, 10/01/32 (DD, settling 11/01/02)
20,500 State of California, General Obligation Bonds, Series 2002 4/12 at 100.00 AAA 20,580,155
Refunding, 5.000%, 4/01/27
5,500 California Statewide Communities Development Authority, 7/04 at 102.00 AAA 5,945,885
San Diego, California, Certificates of Participation, The Salk
Institute for Biological Studies, 6.200%, 7/01/24
Foothill/Eastern Transportation Corridor Agency, California, Toll Road
Refunding Revenue Bonds, Series 1999:
22,985 0.000%, 1/15/24 1/10 at 44.52 AAA 6,949,515
22,000 0.000%, 1/15/31 1/10 at 29.11 AAA 4,338,620
50,000 0.000%, 1/15/37 1/10 at 20.19 AAA 6,826,500
5,000 Garden Grove, California, Certificates of Participation, Financing 3/12 at 101.00 AAA 5,076,150
Project, Series 2002A, 5.125%, 3/01/32
5,000 Inland Empire Solid Waste Financing Authority, California, Revenue 8/06 at 102.00 AAA 5,726,250
Bonds, 1996 Series B (Landfill Improvement Financing Project),
6.000%, 8/01/16 (Alternative Minimum Tax) (Pre-refunded
to 8/01/06)
5,543 Moreno Valley Public Finance Authority, California, Assisted Living 1/12 at 105.00 Aaa 6,666,954
Housing Revenue Bonds, GNMA Collateralized - CDC Assisted
Living Project, Series 2000A, 7.500%, 1/20/42
6,430 Ontario Redevelopment Financing Authority, San Bernardino County, 8/03 at 102.00 AAA 6,737,804
California, 1993 Revenue Bonds, Ontario Redevelopment Project
No. 1, 5.850%, 8/01/22
5,000 Airports Commission of the City and County of San Francisco, 1/08 at 102.00 AAA 4,977,150
California, San Francisco International Airport, Second Series
Revenue Bonds, Issue 15A, 5.000%, 5/01/28
(Alternative Minimum Tax)
Airports Commission of the City and County of San Francisco,
California, San Francisco International Airport, Second Series
Revenue Refunding Bonds, Issue 27A:
7,200 5.125%, 5/01/21 (Alternative Minimum Tax) 5/11 at 100.00 AAA 7,289,064
22,690 5.250%, 5/01/31 (Alternative Minimum Tax) 5/11 at 100.00 AAA 23,008,341
16
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
COLORADO - 1.7%
$ 5,630 E-470 Public Highway Authority, Arapahoe County, Colorado, 8/05 at 103.00 AAA $ 6,422,310
Capital Improvement Trust Fund Highway Revenue Bonds
(E-470 Project), Vehicle Registration Fee Bonds, 6.150%, 8/31/26
(Pre-refunded to 8/31/05)
3,750 City and County of Denver, Colorado, Airport Revenue Bonds, 11/06 at 101.00 AAA 3,903,525
Series 1996D, 5.500%, 11/15/25
65 Jefferson County, Colorado, Single Family Revenue Refunding 4/03 at 101.00 AAA 66,373
Bonds, Series 1991A, 8.875%, 10/01/13
------------------------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA - 1.3%
8,000 Washington Convention Center Authority, Washington, D.C., 10/08 at 101.00 AAA 8,043,840
Senior Lien Dedicated Tax Revenue Bonds, Series 1998,
5.000%, 10/01/21
------------------------------------------------------------------------------------------------------------------------------------
FLORIDA - 6.5%
6,185 Florida Housing Finance Agency, Single Family Mortgage Revenue 7/04 at 102.00 AAA 6,416,010
Bonds, 1994 Series B, 6.650%, 7/01/26 (Alternative Minimum Tax)
20,000 Lee County, Florida, Airport Revenue Bonds, Series 2000A, 10/10 at 101.00 AAA 21,178,200
5.750%, 10/01/25 (Alternative Minimum Tax)
4,115 Housing Finance Authority of Miami-Dade County, Florida, 7/11 at 100.00 AAA 4,306,965
Multifamily Housing Revenue Bonds, Series 2001-2A,
Monterey Pointe Apartments Project, 5.850%, 7/01/37
(Alternative Minimum Tax)
7,000 Miami-Dade County, Florida, Aviation Revenue Bonds, 10/12 at 100.00 AAA 7,127,890
Miami International Airport, Series 2002, 5.375%, 10/01/32
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
HAWAII - 7.0%
State of Hawaii, Airports System Revenue Bonds, Refunding
Series 2000B:
8,785 6.625%, 7/01/18 (Alternative Minimum Tax) 7/10 at 101.00 AAA 10,273,267
7,000 6.000%, 7/01/19 (Alternative Minimum Tax) 7/10 at 101.00 AAA 7,726,110
6,130 Department of Budget and Finance of the State of Hawaii, 12/02 at 102.00 AAA 6,272,400
Special Purpose Revenue Bonds (Hawaiian Electric Company,
Inc. and Subsidiaries Projects), Series 1992, 6.550%, 12/01/22
(Alternative Minimum Tax)
16,180 Department of Budget and Finance of the State of Hawaii, 5/06 at 101.00 AAA 17,794,440
Special Purpose Revenue Bonds (Hawaii Electric Company, Inc.
and Subsidiaries Project), Series 1996A, 6.200%, 5/01/26
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
ILLINOIS - 19.1%
10,000 City of Chicago, Illinois, General Obligation Bonds, Project 7/05 at 102.00 AAA 11,239,900
Series 1995, 6.125%, 1/01/16 (Pre-refunded to 7/01/05)
6,000 City of Chicago, Illinois, Chicago-O'Hare International Airport, 1/05 at 102.00 AAA 6,570,600
General Airport Second Lien Revenue Refunding Bonds,
1994 Series A, 6.375%, 1/01/12
9,500 City of Chicago, Illinois, Chicago-O'Hare International Airport, 1/10 at 101.00 AAA 10,081,875
General Airport Second Lien Revenue Refunding Bonds,
1999 Series, 5.500%, 1/01/15 (Alternative Minimum Tax)
6,825 Public Building Commission of Chicago, Illinois, Building Revenue 12/03 at 102.00 AAA 7,259,889
Bonds, Series A of 1993 (Board of Education of the City of
Chicago), 5.750%, 12/01/18 (Pre-refunded to 12/01/03)
7,165 Illinois Development Finance Authority, Revenue Bonds (Bradley 8/09 at 101.00 AAA 7,445,868
University Project), Series 1999, 5.500%, 8/01/29
25,000 Illinois Health Facilities Authority, Revenue Bonds, Series 2000 2/10 at 101.00 AAA 26,738,750
(Iowa Health System), 5.875%, 2/15/30
15,785 State of Illinois, General Obligation Bonds (Illinois FIRST), 4/12 at 100.00 AAA 16,165,892
Series of April 2002, 5.250%, 4/01/27
13,275 State of Illinois, General Obligation Bonds (Illinois FIRST), 5/11 at 100.00 AAA 13,571,696
Series of 2001, 5.250%, 5/01/26
18,000 Metropolitan Pier and Exposition Authority, Illinois, McCormick No Opt. Call AAA 5,385,060
Place Expansion Project Revenue Bonds, Series 2002A,
0.000%, 12/15/24
10,000 University of Illinois, Certificates of Participation, Utility 8/11 at 100.00 AAA 10,300,800
Infrastructure Projects, Series 2001B, 5.250%, 8/15/21
17
Nuveen Insured Quality Municipal Fund, Inc. (NQI) (continued)
Portfolio of INVESTMENTS October 31, 2002
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
INDIANA - 1.8%
$ 6,000 Jasper County, Indiana, Collateralized Pollution Control Refunding 1/03 at 101.00 AAA $ 6,214,800
Revenue Bonds (Northern Indiana Public Service Company
Project), Series 1991, 7.100%, 7/01/17
4,230 City of Rockport, Indiana, Pollution Control Revenue Refunding 3/03 at 100.00 AAA 4,386,933
Bonds (Indiana/Michigan Power Company Project), Series B,
7.600%, 3/01/16
------------------------------------------------------------------------------------------------------------------------------------
KENTUCKY - 3.7%
Kentucky Economic Development Finance Authority, Health
System Revenue Bonds, Norton Healthcare Inc., Series 2000C:
6,345 0.000%, 10/01/27 10/13 at 101.00 AAA 5,701,554
18,185 0.000%, 10/01/28 10/13 at 101.00 AAA 16,340,859
------------------------------------------------------------------------------------------------------------------------------------
LOUISIANA - 3.3%
13,170 City of New Orleans, Louisiana, General Obligation Refunding 10/05 at 101.00 AAA 14,554,430
Bonds, Series 1995, 6.200%, 10/01/21
4,720 Orleans Levee District (A Political Subdivision of the State of 12/05 at 103.00 AAA 5,297,681
Louisiana), Levee Improvement Bonds, Series 1986,
5.950%, 11/01/15
------------------------------------------------------------------------------------------------------------------------------------
MAINE - 1.4%
8,000 Maine Health and Higher Educational Facilities Authority, Revenue 7/09 at 101.00 AAA 8,645,040
Bonds Series 1999B, 6.000%, 7/01/29
------------------------------------------------------------------------------------------------------------------------------------
MARYLAND - 1.8%
2,570 City of Baltimore, Maryland, Wastewater Project Revenue Bonds, 7/12 at 100.00 AAA 2,585,780
Series 2002A Refunding, 5.125%, 7/01/42
7,535 Maryland Transportation Authority, Baltimore-Washington 3/12 at 101.00 AAA 7,978,812
International Airport Parking Revenue Bonds, Series 2002B,
5.500%, 3/01/18 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS - 3.0%
18,000 Massachusetts Bay Transportation Authority, Senior Sales Tax 7/12 at 100.00 AAA 18,057,600
Revenue Bonds, Series 2002A Refunding, 5.000%, 7/01/27
(WI, settling 11/14/02)
------------------------------------------------------------------------------------------------------------------------------------
MICHIGAN - 2.2%
8,500 School District of the City of Detroit, Wayne County, Michigan, 5/13 at 100.00 AAA 8,501,360
General Obligation Bonds, Series 2002A, 5.000%, 5/01/32
4,750 Michigan Strategic Fund, Limited Obligation Refunding Revenue 9/09 at 102.00 AAA 4,925,797
Bonds (The Detroit Edison Company Pollution Control Bonds
Project), Collateralized Series 1999A, 5.550%, 9/01/29
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
MINNESOTA - 0.1%
437 City of St. Louis Park, Minnesota, Single Family Residential 4/03 at 100.00 Aaa 439,871
Mortgage Revenue Refunding Bonds (GNMA Mortgage-Backed
Securities Program), Series 1991-A, 7.250%, 4/20/23
------------------------------------------------------------------------------------------------------------------------------------
MISSISSIPPI - 2.5%
2,545 Harrison County Wastewater Management District, No Opt. Call AAA 3,487,108
Mississippi, Wastewater Treatment Facilities Revenue
Refunding Bonds, Series 1991A, 8.500%, 2/01/13
2,715 Harrison County Wastewater Management District, No Opt. Call AAA 3,589,121
Mississippi, Wastewater Treatment Facilities Revenue
Refunding Bonds, Series 1991B, 7.750%, 2/01/14
7,245 Mississippi Home Corporation, Single Family Mortgage 6/06 at 105.00 Aaa 8,013,550
Revenue Bonds, GNMA Collateralized Home Mortgage
Program, Series 1996C, 7.600%, 6/01/29 (Alternative
Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
MISSOURI - 0.9%
5,000 St. Louis Municipal Finance Corporation, City Justice Center, 2/06 at 102.00 AAA 5,659,900
City of St. Louis, Missouri (Lessee), Leasehold Revenue
Improvement Bonds, Series 1996A, 6.000%, 2/15/19
(Pre-refunded to 2/15/06)
------------------------------------------------------------------------------------------------------------------------------------
NEVADA - 9.0%
33,700 Director of the State of Nevada, Department of Business 1/10 at 100.00 AAA 34,460,946
and Industry, Las Vegas Monorail Project Revenue Bonds,
1st Tier Series 2000, 5.375%, 1/01/40
18
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
NEVADA (continued)
$ 5,720 Reno, Nevada, Sales and Room Tax Revenue Bonds, Reno 6/12 at 100.00 AAA $ 5,753,290
Transportation Rail Access Corridor Project, Senior Lien
Series 2002, 5.125%, 6/01/32
13,185 Washoe County, Nevada, Hospital Refunding Revenue Bonds 6/04 at 102.00 AAA 13,860,995
(Washoe Medical Center, Inc. Project), Series 1994A,
6.000%, 6/01/19
------------------------------------------------------------------------------------------------------------------------------------
NEW JERSEY - 0.7%
3,750 New Jersey Health Care Facilities Financing Authority, 7/04 at 102.00 AAA 4,099,050
Revenue Bonds, Monmouth Medical Center Issue, Series C,
6.250%, 7/01/24 (Pre-refunded to 7/01/04)
------------------------------------------------------------------------------------------------------------------------------------
NEW MEXICO - 2.6%
6,000 City of Farmington, New Mexico, Pollution Control Refunding 4/03 at 100.00 BB 5,810,820
Revenue Bonds (Southern California Edison Company Four
Corners Project), 1991 Series A, 7.200%, 4/01/21
3,850 New Mexico Mortgage Finance Authority, Multifamily Housing 1/03 at 100.00 AAA 3,863,129
Refunding Revenue Bonds, 1990 Series A (Fannie Mae
Collateralized), 7.625%, 1/01/24
5,750 City of Santa Fe, New Mexico, Revenue Bonds, Series 1994A, 6/04 at 100.00 AAA 6,156,238
6.300%, 6/01/24 (Pre-refunded to 6/01/04)
------------------------------------------------------------------------------------------------------------------------------------
NEW YORK - 12.9%
6,500 Metropolitan Transportation Authority, New York, Dedicated 11/12 at 100.00 AAA 6,522,750
Tax Fund Bonds, Series 2002A, 5.000%, 11/15/32
(DD, settling 11/01/02)
City of New York, New York, General Obligation Bonds, Fiscal
1991 Series A:
2,000 8.000%, 3/15/11 3/03 at 100.00 AAA 2,044,600
6,000 7.250%, 3/15/19 3/03 at 100.00 AAA 6,506,940
10,335 New York City Municipal Water Finance Authority, New York, 6/05 at 101.00 AAA 11,479,601
Water and Sewer System Revenue Bonds, Fiscal 1996 Series A,
6.000%, 6/15/25 (Pre-refunded to 6/15/05)
11,760 Dormitory Authority of the State of New York, Court Facilities 5/10 at 101.00 AAA 12,794,527
Lease Revenue Bonds (City of New York Issue), Series 1999,
5.750%, 5/15/30
7,000 New York State Energy Research and Development Authority, 7/05 at 102.00 A+ 7,519,680
Facilities Refunding Revenue Bonds, Series 1995 A (Consolidated
Edison Company of New York, Inc. Project), 6.100%, 8/15/20
11,950 New York State Housing Finance Agency, Housing Project 5/06 at 102.00 AAA 13,070,432
Mortgage Revenue Bonds, 1996 Series A Refunding,
6.125%, 11/01/20
4,200 State of New York Mortgage Agency, Homeowner Mortgage 10/09 at 100.00 AAA 4,342,674
Revenue Bonds, Series 82, 5.550%, 10/01/19
(Alternative Minimum Tax)
12,000 New York State Medical Care Facilities Finance Agency, 2/05 at 102.00 AAA 13,540,800
New York, Hospital FHA-Insured Mortgage Revenue Bonds,
Series 1994A, 6.900%, 8/15/34 (Pre-refunded to 2/15/05)
------------------------------------------------------------------------------------------------------------------------------------
NORTH DAKOTA - 3.6%
20,000 Mercer County, North Dakota, Pollution Control Refunding 1/05 at 102.00 AAA 21,602,600
Revenue Bonds, Second 1995 Series (Basin Electric Power
Cooperative - Antelope Valley Unit 1 and Common Facilities),
6.050%, 1/01/19
------------------------------------------------------------------------------------------------------------------------------------
OHIO - 0.9%
5,000 County of Lorain, Ohio, Health Facilities Revenue Bonds, 9/09 at 102.00 AAA 5,218,100
Series 1999 A (Catholic Healthcare Partners), 5.500%, 9/01/29
------------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA - 2.5%
7,000 County of Allegheny, Pennsylvania, Airport Revenue Refunding 1/08 at 101.00 AAA 7,182,840
Bonds, Series 1997A (Pittsburgh International Airport),
5.250%, 1/01/16 (Alternative Minimum Tax)
7,250 Lehigh County Industrial Development Authority, Pennsylvania, 8/05 at 102.00 AAA 8,026,185
Pollution Control Revenue Refunding Bonds, 1995 Series A
(Pennsylvania Power and Light Company Project),
6.150%, 8/01/29
------------------------------------------------------------------------------------------------------------------------------------
RHODE ISLAND - 0.9%
5,050 Rhode Island Port Authority and Economic Development 7/04 at 102.00 AAA 5,443,850
Corporation, Airport Revenue Bonds, 1994 Series A,
6.625%, 7/01/24 (Alternative Minimum Tax)
19
Nuveen Insured Quality Municipal Fund, Inc. (NQI) (continued)
Portfolio of INVESTMENTS October 31, 2002
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
TENNESSEE - 0.9%
$ 5,170 Health, Educational and Housing Facilities Board of the County 2/03 at 102.00 AAA $ 5,320,654
of Sullivan, Tennessee, Hospital Revenue Bonds, Series 1993
(Holston Valley Health Care, Inc.), 5.750%, 2/15/13
------------------------------------------------------------------------------------------------------------------------------------
TEXAS - 19.4%
8,000 Abilene Health Facilities Development Corporation, Texas, 9/05 at 102.00 AAA 8,790,560
Hospital Revenue Refunding and Improvement Bonds, Hendrick
Medical Center Project, Series 1995C, 6.150%, 9/01/25
5,275 City of Austin, Texas, Combined Utility System Revenue Refunding 11/07 at 100.00 AAA 5,359,558
Bonds, Series 1997, 5.125%, 11/15/20
Harris County Hospital District, Texas, Revenue Bonds, Refunding
Series 1990:
2,100 7.400%, 2/15/10 No Opt. Call AAA 2,434,089
2,900 7.400%, 2/15/10 No Opt. Call AAA 3,410,719
4,500 City of Houston, Texas, General Obligation Public Improvement 3/11 at 100.00 AAA 4,516,425
Bonds, Series 2001A, 5.000%, 3/01/22
4,685 City of Houston, Texas, Airport System Subordinate Lien Revenue 7/10 at 100.00 AAA 4,854,972
Bonds, Series 2000A, 5.500%, 7/01/19 (Alternative Minimum Tax)
17,000 City of Houston, Texas, Water and Sewer System Junior Lien No Opt. Call AAA 19,333,930
Revenue Refunding Bonds, Series 2002A, 5.750%, 12/01/32
19,200 Jefferson County Health Facilities Development Corporation, 8/11 at 100.00 AAA 19,641,984
Texas, FHA-Insured Mortgage Revenue Bonds, Baptist Hospital
of Southeast Texas, Series 2001, 5.400%, 8/15/31
6,000 Laredo Community College District, Texas, Limited Tax General 8/10 at 100.00 AAA 6,160,080
Obligation Bonds, Series 2001, 5.375%, 8/01/31
22,045 North Central Texas Health Facility Development Corporation, 8/12 at 101.00 AAA 22,185,868
Revenue Bonds, Children's Medical Center of Dallas,
Series 2002, 5.250%, 8/15/32
17,715 Tarrant County Housing Finance Corporation, Texas, Multifamily 3/12 at 105.00 Aaa 20,186,597
Housing Revenue Bonds, Series 2001, GNMA Collateralized
Mortgage Loan - Bardin Green Apartments Project,
6.600%, 9/20/42
------------------------------------------------------------------------------------------------------------------------------------
UTAH - 1.1%
6,000 Salt Lake City, Utah, Hospital Revenue Refunding Bonds 11/02 at 100.00 AAA 6,912,300
(IHC Hospitals, Inc.), Series 1988 A, 8.000%, 5/15/07
------------------------------------------------------------------------------------------------------------------------------------
WASHINGTON - 9.6%
10,730 Public Utility District No. 1 of Chelan County, Washington, 7/11 at 101.00 AAA 11,233,559
Chelan Hydro Consolidated System Revenue Bonds,
Series 2001C Refunding, 5.650%, 7/01/32 (Alternative
Minimum Tax)
4,740 Housing Authority of the City of Seattle, Washington, Low Income 9/11 at 102.00 AAA 5,163,140
Housing Assistance Revenue Bonds, Series 2000A, GNMA
Collateralized Mortgage Loan - RHF/Esperanza Apartments
Project, 6.125%, 3/20/42 (Alternative Minimum Tax)
15,025 Housing Authority of the City of Seattle, Washington, Low Income 11/11 at 105.00 AAA 17,368,449
Housing Assistance Revenue Bonds, 2000 Series A,
GNMA Collateralized Mortgage Loan - Park Place Project,
7.000%, 5/20/42
5,000 City of Seattle, Washington, Municipal Light and Power Revenue 12/10 at 100.00 AAA 5,123,800
Bonds, 2000, 5.250%, 12/01/21
3,625 Municipality of Metropolitan Seattle, Washington, Sewer Refunding 1/03 at 102.00 AAA 3,720,519
Revenue Bonds, Series Z, 5.500%, 1/01/33 (Pre-refunded to 1/01/03)
2,500 Washington Health Care Facilities Authority, Revenue Bonds, 12/09 at 101.00 AAA 2,591,025
Series 1999 (Providence Services), 5.375%, 12/01/19
11,750 Washington Public Power Supply System, Nuclear Project No.1 7/08 at 102.00 AAA 12,412,113
Refunding Revenue Bonds, Series 1998A., 5.125%, 7/01/17
20
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
WEST VIRGINIA - 2.2%
$ 12,845 West Virginia Water Development Authority, Infrastructure Revenue 10/10 at 100.00 AAA $ 13,302,537
Bonds, West Virginia Infrastructure and Jobs Development
Council Program, 2000 Series A, 5.500%, 10/01/39
------------------------------------------------------------------------------------------------------------------------------------
$ 968,180 Total Long-Term Investments (cost $864,783,979) - 154.0% 926,184,951
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - (1.1)% (6,689,853)
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (52.9)% (318,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $601,495,098
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares.
All of the bonds in the portfolio are either covered by
Original Issue Insurance, Secondary Market Insurance or
Portfolio Insurance, or are backed by an escrow or trust
containing sufficient U.S. Government or U.S. Government
agency securities, any of which ensure the timely payment of
principal and interest.
* Optional Call Provisions (not covered by the report of
independent auditors): Dates (month and year) and
prices of the earliest optional call or redemption.
There may be other call provisions at varying prices at
later dates.
** Ratings (not covered by the report of independent
auditors): Using the higher of Standard & Poor's or
Moody's rating.
(DD) Security purchased on a delayed delivery basis.
(WI) Security purchased on a when-issued basis.
See accompanying notes to financial statements.
21
Nuveen Insured Municipal Opportunity Fund, Inc. (NIO)
Portfolio of
INVESTMENTS October 31, 2002
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
ALABAMA - 13.2%
$ 3,850 Alabama Housing Finance Authority, Multifamily Housing Revenue 7/05 at 103.00 Aaa $ 4,080,038
Refunding Bonds (GNMA Collateralized - Royal Hills),
1995 Series F, 6.500%, 7/20/30
11,000 Special Care Facilities Financing Authority of the City of 5/05 at 102.00 AAA 11,493,460
Birmingham, Alabama, Baptist Medical Centers Revenue Bonds,
Series 1995-B, Baptist Health System, Inc., 5.875%, 11/15/20
Special Care Facilities Financing Authority of the City of
Birmingham, Alabama, Baptist Medical Centers Revenue Bonds,
Series 1996-A, Baptist Health System, Inc.:
7,465 5.875%, 11/15/19 11/06 at 102.00 AAA 8,181,341
1,750 5.875%, 11/15/26 11/06 at 102.00 AAA 1,866,830
11,175 City Board of Education of the City of Hoover, Alabama, 2/11 at 100.00 AAA 11,472,479
Capital Outlay Tax Anticipation Warrants, Series 2001,
5.250%, 2/15/22
36,020 Jefferson County, Alabama, Sewer Revenue Refunding 2/07 at 100.00 AAA 36,631,980
Warrants, Series 1997-A, 5.375%, 2/01/27
Jefferson County, Alabama, Sewer Revenue Capital Improvement
Warrants, Series 1999-A:
20,605 5.000%, 2/01/33 2/09 at 101.00 AAA 20,492,085
12,000 5.375%, 2/01/36 (Pre-refunded to 2/01/09) 2/09 at 101.00 AAA 13,532,880
29,860 5.750%, 2/01/38 (Pre-refunded to 2/01/09) 2/09 at 101.00 AAA 34,303,168
24,000 Jefferson County, Alabama, Sewer Revenue Capital Improvement 2/11 at 101.00 AAA 23,655,600
Warrants, Series 2001A, 5.000%, 2/01/41
4,250 Shelby County Board of Education, Alabama, General Obligation 2/05 at 102.00 AAA 4,598,160
Warrants, Series 1995 Refunding, 5.875%, 2/01/17
------------------------------------------------------------------------------------------------------------------------------------
ALASKA - 5.8%
Alaska Housing Finance Corporation, General Mortgage Revenue
Bonds 1999 Series A:
24,110 6.050%, 6/01/35 (Pre-refunded to 12/01/02) 12/02 at 100.00 AAA 25,349,977
11,500 6.050%, 6/01/39 6/09 at 100.00 AAA 12,069,135
11,460 Alaska Housing Finance Corporation, Governmental Purpose 12/05 at 102.00 AAA 11,757,387
Bonds, 1995 Series A, 5.875%, 12/01/30
17,385 Alaska Housing Finance Corporation, Collateralized Bonds, 12/09 at 100.00 AAA 18,250,599
1999First Series (Veterans Mortgage Program A-2),
6.250%, 6/01/39 (Alternative Minimum Tax)
3,435 Alaska Housing Finance Corporation, Collateralized Bonds, 12/09 at 100.00 AAA 3,634,230
1999First Series (Veterans Mortgage Program A-1),
6.150%, 6/01/39
3,000 Alaska Student Loan Corporation, Student Loan Revenue Bonds, 7/08 at 100.00 AAA 3,106,710
1998 Series A, 5.250%, 7/01/14 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
ARIZONA - 0.7%
8,345 Industrial Development Authority of the County of Pima, Arizona, 1/03 at 102.50 AAA 8,778,523
Industrial Development Lease Obligation Refunding Revenue
Bonds, 1988 Series A (Irvington Project), 7.250%, 7/15/10
------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA - 26.6%
6,135 California Housing Finance Agency, Housing Insured Revenue 8/04 at 102.00 AAA 6,377,639
Bonds, 1994 Series C, 6.250%, 8/01/25
California Rural Home Mortgage Finance Authority, Single Family
Mortgage Revenue Bonds (Mortgage-Backed Securities Program),
1996 Series A:
1,180 7.550%, 11/01/26 (Alternative Minimum Tax) No Opt. Call AAA 1,265,715
960 7.750%, 5/01/27 (Alternative Minimum Tax) No Opt. Call AAA 1,034,918
4,500 State of California, General Obligation Bonds, 5.000%, 10/01/19 10/08 at 101.00 AAA 4,601,430
10,000 Department of Veterans Affairs of the State of California, Home 6/12 at 101.00 AAA 10,455,500
Purchase Revenue Bonds, Series 2002A, 5.300%, 12/01/21
California Housing Finance Agency, Home Mortgage Revenue Bonds,
2000 Series Y:
22,365 0.000%, 8/01/20 (Alternative Minimum Tax) 11/10 at 55.40 AAA 8,039,770
4,675 0.000%, 8/01/31 (Alternative Minimum Tax) 11/10 at 27.89 AAA 837,433
22
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA (continued)
$ 3,100 Campbell Union School District, Santa Clara County, California, 8/04 at 102.00 AAA $ 3,405,133
1994 General Obligation Bonds, Series A, 6.250%, 8/01/19
(Pre-refunded to 8/01/04)
8,200 Castaic Lake Water Agency, California, Refunding Revenue 8/04 at 102.00 AAA 8,908,480
Certificates of Participation (Water System Improvement
Projects), Series 1994A, 6.300%, 8/01/20
20,000 Cucamonga County Water District, California, Certificates 9/11 at 101.00 AAA 20,248,400
of Participation, 2000 Water Shares Purchase, 5.125%, 9/01/35
5,500 Fallbrook Union High School District, San Diego County, California, 9/04 at 102.00 AAA 6,061,110
1994 General Obligation Bonds, Series A, 6.250%, 9/01/19
(Pre-refunded to 9/01/04)
5,000 Long Beach Bond Finance Authority, California, Lease Revenue 11/11 at 101.00 AAA 5,135,050
Refunding Bonds, The Aquarium of the South Pacific,
5.250%, 11/01/30
9,000 County of Orange, California, Refunding Recovery Bonds, 6/05 at 102.00 AAA 9,825,660
1995 Series A, 5.750%, 6/01/15
12,500 County of Orange, California, 1996 Recovery Certificates of 7/06 at 102.00 AAA 14,160,500
Participation, Series A, 6.000%, 7/01/26
Port of Oakland, California, Revenue Bonds, Series 2002L:
13,205 5.000%, 11/01/22 (Alternative Minimum Tax) 11/12 at 100.00 AAA 13,251,482
6,000 5.000%, 11/01/23 (Alternative Minimum Tax) 11/12 at 100.00 AAA 6,016,380
15,250 Port of Oakland, California, Revenue Bonds, Series 2002L, 11/12 at 100.00 AAA 15,144,470
5.000%, 11/01/32 (Alternative Minimum Tax)
Poway Redevelopment Agency, California, Tax Allocation Bonds,
Series 2001, Paguay Redevelopment Project:
15,000 5.200%, 6/15/30 12/11 at 101.00 AAA 15,324,900
5,000 5.125%, 6/15/33 12/11 at 101.00 AAA 5,062,750
19,300 Sacramento Power Authority, California, Cogeneration Project 7/06 at 102.00 AAA 21,648,038
Revenue Bonds, 1995 Series, 5.875%, 7/01/15
6,500 City of Salinas, California, Housing Facility Refunding Revenue 7/04 at 102.00 AAA 6,787,300
Bonds, Series 1994A (GNMA Collateralized - Villa Serra
Project), 6.600%, 7/20/30
10,000 Airports Commission of the City and County of San Francisco, 5/06 at 101.00 AAA 10,217,400
California, San Francisco International Airport, Second Series
Revenue Bonds, Issue 13B, 5.500%, 5/01/26 (Alternative
Minimum Tax)
11,000 Airports Commission of the City and County of San Francisco, 1/08 at 102.00 AAA 10,949,730
California, San Francisco International Airport, Second Series
Revenue Bonds, Issue 15A, 5.000%, 5/01/28 (Alternative
Minimum Tax)
18,710 Airports Commission of the City and County of San Francisco, 5/11 at 100.00 AAA 18,998,321
California, San Francisco International Airport, Second Series
Revenue Refunding Bonds, Issue 27A, 5.250%, 5/01/26
(Alternative Minimum Tax)
11,500 San Francisco Bay Area Rapid Transit District, California, Sales 7/11 at 100.00 AAA 11,617,875
Tax Revenue Bonds, Series 2001, 5.125%, 7/01/36
66,685 San Joaquin Hills Transportation Corridor Agency, Orange County, No Opt. Call AAA 26,782,697
California, Senior Lien Toll Road Revenue Bonds, 0.000%, 1/01/21
San Joaquin Hills Transportation Corridor Agency, Orange County,
California, Toll Road Refunding Revenue Bonds, Series 1997A:
31,615 5.250%, 1/15/30 1/07 at 102.00 AAA 32,308,949
21,500 0.000%, 1/15/32 No Opt. Call AAA 4,541,660
12,525 San Diego Redevelopment Agency, California, Tax Allocation 8/10 at 101.00 AAA 12,822,719
Bonds, Merged Area Redevelopment Project, Series 2002,
5.000%, 8/01/20
11,000 Santa Ana Financing Authority, California, Police Administration No Opt. Call AAA 13,174,700
and Housing Facility Lease Revenue Bonds, Series 1994A,
6.250%, 7/01/24
5,500 Santa Clara County Financing Authority, California, Lease 11/04 at 102.00 AAA 6,164,400
Revenue Bonds (VMC Facility Replacement Project),
1994 Series A, 6.750%, 11/15/20 (Pre-refunded to 11/15/04)
11,090 Regents of the University of California, Multiple Purpose Projects 9/10 at 101.00 AAA 11,187,925
Revenue Bonds, 2002 Series O, 5.000%, 9/01/24
23
Nuveen Insured Municipal Opportunity Fund, Inc. (NIO) (continued)
Portfolio of INVESTMENTS October 31, 2002
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
COLORADO - 6.1%
$ 15,000 City and County of Denver, Colorado, Airport System Revenue 11/11 at 100.00 AAA $ 15,948,900
Refunding Bonds, Series 2001A, 5.500%, 11/15/15
(Alternative Minimum Tax)
10,545 City and County of Denver, Colorado, Airport Revenue Bonds, 11/06 at 101.00 AAA 10,976,712
Series 1996D, 5.500%, 11/15/25
35,995 E-470 Public Highway Authority, Colorado, Senior Revenue Bonds, No Opt. Call AAA 11,646,902
Series 1997B, 0.000%, 9/01/23
30,800 E-470 Public Highway Authority, Colorado, Senior Revenue Bonds, 9/10 at 102.00 AAA 33,331,144
Series 2000A, 5.750%, 9/01/35
11,800 E-470 Public Highway Authority, Colorado, Senior Revenue Bonds, 9/10 at 74.80 AAA 6,101,308
2000 Series B, 0.000%, 9/01/15
------------------------------------------------------------------------------------------------------------------------------------
CONNECTICUT - 0.2%
2,500 State of Connecticut Health and Educational Facilities Authority, 7/04 at 101.00 AAA 2,738,650
Revenue Bonds, Choate Rosemary Hall Issue, Series A,
7.000%, 7/01/25 (Pre-refunded to 7/01/04)
------------------------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA - 0.8%
4,540 District of Columbia Housing Finance Agency, Collateralized 12/02 at 101.00 AAA 4,590,394
Single Family Mortgage Revenue Bonds, Series 1990B,
7.100%, 12/01/24 (Alternative Minimum Tax)
4,840 Metropolitan Washington Airports Authority, District of Columbia, 10/11 at 101.00 AAA 5,067,674
Airport System Revenue Bonds, Series 2001A, 5.500%, 10/01/19
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
FLORIDA - 3.1%
184 Housing Finance Authority of Dade County, Florida, Single Family 12/02 at 101.00 AAA 186,710
Mortgage Revenue Refunding Bonds, 1991 Series D,
6.950%, 12/15/12
90 Escambia County Housing Finance Authority, Florida, 4/05 at 102.00 AAA 94,447
Single Family Mortgage Revenue Bonds (Multi-County
Program), Series 1995, 6.950%, 10/01/27 (Alternative
Minimum Tax)
2,980 Florida Housing Finance Agency, Home Ownership Revenue No Opt. Call AAA 3,390,197
Refunding Bonds, 1987 Series G1, 8.595%, 11/01/17
35,920 Miami-Dade County, Florida, Miami International Airport 10/12 at 100.00 AAA 36,576,258
Aviation Revenue Bonds, Series 2002, 5.375%, 10/01/32
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
GEORGIA - 1.1%
8,900 City of Atlanta, Georgia, Water and Wastewater Revenue Bonds, 5/12 at 100.00 AAA 8,840,548
Series 2001A, 5.000%, 11/01/39
5,000 Glynn-Brunswick Memorial Hospital Authority, Georgia, Revenue 8/06 at 102.00 AAA 5,478,850
Anticipation Certificates (Southeast Georgia Health Systems
Project), Series 1996, 5.250%, 8/01/13
------------------------------------------------------------------------------------------------------------------------------------
HAWAII - 2.1%
24,250 Department of Budget and Finance of the State of Hawaii, 5/06 at 101.00 AAA 26,669,665
Special Purpose Revenue Bonds (Hawaii Electric Company, Inc.
and Subsidiaries Project), Series 1996A, 6.200%, 5/01/26
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
IDAHO - 0.6%
2,185 Idaho Housing Agency, Single Family Mortgage Bonds, No Opt. Call Aa1 2,416,020
1994 Series B-1, 6.750%, 7/01/22
2,050 Idaho Housing Agency, Single Family Mortgage Bonds, No Opt. Call Aa1 2,278,596
1994 Series B-2, 6.900%, 7/01/26 (Alternative Minimum Tax)
2,745 Idaho Housing Agency, Single Family Mortgage Bonds, 1/05 at 102.00 Aaa 2,853,977
1995 Series B, 6.600%, 7/01/27 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
ILLINOIS - 10.7%
4,055 Central Lake County Joint Action Water Agency, 2/03 at 102.00 Aa2 4,168,540
Lake County, Illinois, General Obligation Water Refunding
Bonds, Series 1992, 6.000%, 2/01/19
10,000 City of Chicago, Illinois, General Obligation Bonds, Project 1/11 at 101.00 AAA 10,170,300
and Refunding Series 2001A, 5.250%, 1/01/33
(DD, settling 11/01/02)
12,500 City of Chicago, Illinois, Chicago-O'Hare International Airport, 1/04 at 102.00 AAA 12,665,250
General Airport Second Lien Revenue Refunding Bonds,
1993 Series C, 5.000%, 1/01/18
City of Chicago, Illinois, Chicago-O'Hare International Airport,
Second Lien Passenger Facility Charge Revenue Bonds, Series
2001E Refunding:
4,615 5.500%, 1/01/17 (Alternative Minimum Tax) 1/11 at 101.00 AAA 4,843,258
4,870 5.500%, 1/01/18 (Alternative Minimum Tax) 1/11 at 101.00 AAA 5,081,504
24
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
ILLINOIS (continued)
$ 5,000 Community Unit School District No. 204, Indian Prairie, 12/11 at 100.00 AAA $ 5,311,250
Illinois, General Obligation Bonds, Series 2001,
5.000%, 12/30/15
Board of Governors of State Colleges and Universities, Eastern
Illinois University, Auxiliary Facilities System Revenue Bonds,
Series 1989:
12,355 0.000%, 10/01/09 10/04 at 74.08 AAA 8,516,796
16,470 0.000%, 4/01/16 (Pre-refunded to 10/01/04) 10/04 at 47.07 AAA 7,439,499
10,000 Illinois Development Finance Authority, Revenue Bonds, 5/08 at 101.00 AAA 10,313,800
Series 1998A (Provena Health), 5.500%, 5/15/21
2,095 Illinois Educational Facilities Authority, Robert Morris College 12/07 at 100.00 Aaa 2,255,561
Revenue Bonds, Series 2000, 5.800%, 6/01/30
2,180 Illinois Educational Facilities Authority, DePaul University Revenue 10/10 at 101.00 AAA 2,334,453
Bonds, Series 2000, 5.500%, 10/01/19
20,000 Illinois Health Facilities Authority, Brokaw-Mennonite Association 2/03 at 102.00 AAA 20,461,400
Revenue Refunding Bonds, Series 1992 (BroMenn Healthcare),
6.250%, 8/15/18
7,000 Illinois Health Facilities Authority, Revenue Bonds, Series 1998A, 6/08 at 101.00 Aaa 7,090,020
Hospital Sisters Services, Inc. Obligated Group, 5.000%, 6/01/18
4,500 Illinois Health Facilities Authority, Revenue Bonds, Series 1999 1/09 at 101.00 AAA 4,540,230
(Alexian Brothers Health System), 5.000%, 1/01/19
22,410 State of Illinois, General Obligation Bonds (Illinois FIRST), 2/12 at 100.00 AAA 22,641,719
Series 2002, 5.125%, 2/01/27
4,560 County of Macon, Illinois, Millikin University Revenue Bonds, 10/05 at 100.00 AAA 5,100,132
Series 1995, 6.250%, 10/01/16 (Pre-refunded to 10/01/05)
5,000 Regional Transportation Authority, Cook, DuPage, Kane, Lake, 6/04 at 102.00 AAA 5,485,500
McHenry and Will Counties, Illinois, General Obligation Bonds,
Series 1994D, 6.750%, 6/01/25 (Pre-refunded to 6/01/04)
------------------------------------------------------------------------------------------------------------------------------------
INDIANA - 3.3%
3,250 Indianapolis, Indiana, Local Public Improvement Bond Bank, 7/12 at 100.00 AAA 3,312,693
Series 2002A, Waterworks Project, 5.250%, 7/01/33
20,000 Indianapolis, Indiana, Local Public Improvement Bond Bank, No Opt. Call AAA 5,006,600
Series 1999E, 0.000%, 2/01/28
12,250 City of Lawrenceburg, Indiana, Pollution Control Revenue Refunding 4/03 at 101.00 AAA 12,547,185
Bonds (Indiana Michigan Power Company Project), Series D,
7.000%, 4/01/15
9,545 New Prairie School Building Corporation, LaPorte and St. Joseph 7/04 at 102.00 AAA 10,599,150
Counties, Indiana, First Mortgage Bonds, Series 1994,
7.200%, 7/15/21 (Pre-refunded to 7/15/04)
10,000 Trustees of Purdue University, Indiana, Purdue University 1/12 at 100.00 AAA 10,277,000
Student Fee Bonds, Series O, 5.000%, 7/01/19
------------------------------------------------------------------------------------------------------------------------------------
KANSAS - 0.4%
5,000 University of Kansas Hospital Authority, Health Facilities Revenue 9/09 at 100.00 AAA 5,220,750
Bonds (Kansas University Health System), Series 1999A,
5.650%, 9/01/29
------------------------------------------------------------------------------------------------------------------------------------
KENTUCKY - 1.5%
Louisville and Jefferson County Metropolitan Sewer District,
Kentucky, Sewer and Drainage System Revenue Bonds, 2001 Series
A:
12,980 5.500%, 5/15/34 11/11 at 101.00 AAA 13,630,687
5,225 5.000%, 5/15/36 11/11 at 101.00 AAA 5,222,335
------------------------------------------------------------------------------------------------------------------------------------
LOUISIANA - 1.7%
5,000 Parish of De Soto, State of Louisiana, Pollution Control Revenue 9/09 at 102.00 AAA 5,457,000
Refunding Bonds (Cleco Utility Group, Inc. Project),
Series 1999, 5.875%, 9/01/29
8,050 Orleans Levee District (A Political Subdivision of the State 12/05 at 103.00 AAA 9,035,240
of Louisiana), Levee Improvement Bonds, Series 1986,
5.950%, 11/01/15
3,000 Parish of St. Charles, State of Louisiana, Pollution Control Revenue 12/02 at 101.00 AAA 3,100,200
Bonds (Louisiana Power and Light Company Project),
Series 1991, 7.500%, 6/01/21 (Alternative Minimum Tax)
3,500 Hospital Service District No. 1 of the Parish of Tangipahoa, 2/04 at 102.00 AAA 3,721,515
State of Louisiana, Hospital Revenue Bonds, Series 1994,
6.250%, 2/01/24
25
Nuveen Insured Municipal Opportunity Fund, Inc. (NIO) (continued)
Portfolio of INVESTMENTS October 31, 2002
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS - 6.7%
$ 22,500 Massachusetts Development Finance Authority, Revenue Bonds, 1/12 at 101.00 AAA $ 23,223,375
Series 2002A, WGBH Educational Foundation, 5.375%, 1/01/42
10,500 Massachusetts Health and Educational Facilities Authority, Revenue 1/03 at 102.00 AAA 10,745,070
Bonds, New England Medical Center Hospitals Issue, Series F,
6.625%, 7/01/25
8,400 Massachusetts Health and Educational Facilities Authority, Revenue 10/05 at 102.00 AAA 8,979,852
Bonds, Berkshire Health Systems Issue, Series D, 6.000%, 10/01/13
2,960 Massachusetts Health and Educational Facilities Authority, 1/03 at 102.00 AAA 3,028,761
Revenue Bonds, South Shore Hospital Issue, Series D,
6.500%, 7/01/22
4,865 Massachusetts Housing Finance Agency, Housing Revenue 12/05 at 102.00 AAA 5,130,532
Refunding Bonds, 1995 Series A, 6.100%, 12/01/16
34,815 Massachusetts Turnpike Authority, Metropolitan Highway 1/07 at 102.00 AAA 34,727,614
System Senior Revenue Bonds, 1997 Series A 5.000%, 1/01/37
------------------------------------------------------------------------------------------------------------------------------------
MICHIGAN - 8.0%
6,000 City of Detroit, Michigan, General Obligation Bonds, 10/11 at 100.00 AAA 6,397,740
2001 Series A-1, 5.375%, 4/01/18
5,490 School District of the City of Detroit, Wayne County, Michigan, No Opt. Call AAA 6,412,485
School Building and Site Improvement Bonds
(Unlimited Tax - General Obligation), Series 2001A,
6.000%, 5/01/29
City of Detroit, Michigan, Sewage Disposal System Revenue Bonds,
Series 1999-A:
15,825 5.750%, 7/01/26 (Pre-refunded to 1/01/10) 1/10 at 101.00 AAA 18,236,097
20,000 5.875%, 7/01/27 (Pre-refunded to 1/01/10) 1/10 at 101.00 AAA 23,204,800
1,500 City of Detroit, Michigan, Water Supply System Revenue and 7/04 at 102.00 AAA 1,498,935
Revenue Refunding Bonds, Series 1993, 5.000%, 7/01/23
8,700 City of Detroit, Michigan, Water Supply System Senior Lien 7/07 at 101.00 AAA 8,690,865
Revenue Bonds, Series 1997-A, 5.000%, 7/01/27
8,000 Gaylord Community Schools, Counties of Ostego and Antrim, 5/07 at 37.75 AAA 2,617,760
State of Michigan, 1992 School Building and Site and
Refunding Bonds, 0.000%, 5/01/21 (Pre-refunded to 5/01/07)
27,000 Okemos Public School, County of Ingham, State of Michigan, 5/06 at 34.54 AAA 8,467,470
1991 School Building and Site Bonds, Series I, 0.000%, 5/01/21
(Pre-refunded to 5/01/06)
Charter County of Wayne, Michigan, Detroit Metropolitan Wayne
County Airport, Airport Hotel Revenue Bonds (Limited Tax-General
Obligation), Series 2001A:
10,000 5.250%, 12/01/25 12/11 at 101.00 AAA 10,207,600
10,000 5.000%, 12/01/30 12/11 at 101.00 AAA 9,902,700
6,850 Charter County of Wayne, Michigan, Detroit Metropolitan 12/08 at 101.00 AAA 7,167,566
Wayne County Airport, Airport Revenue Bonds, Series 1998A,
5.375%, 12/01/15 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
MINNESOTA - 1.3%
3,375 Minnesota Housing Finance Agency, Single Family Mortgage 1/04 at 102.00 AA+ 3,490,324
Bonds, 1994 Series M, 6.700%, 7/01/26 (Alternative
Minimum Tax)
13,020 Housing and Redevelopment Authority of the City of St. Paul, 12/11 at 102.00 Aaa 13,239,387
Minnesota, Multifamily Housing Revenue Bonds, GNMA
Collateralized Mortgage Loan - Marian Center-GEAC Project,
Series 2001A, 3.870%, 6/20/43
------------------------------------------------------------------------------------------------------------------------------------
MISSOURI - 0.2%
2,220 Missouri Housing Development Commission, Single Family 1/03 at 101.00 AAA 2,261,603
Mortgage Revenue Bonds (GNMA Mortgage-Backed Securities
Program), 1991 Series C, 6.900%, 7/01/18
------------------------------------------------------------------------------------------------------------------------------------
MONTANA - 2.1%
26,000 City of Forsyth, Rosebud County, Montana, Pollution Control 3/03 at 101.00 AAA 26,615,420
Revenue Refunding Bonds (Puget Sound Power and Light
Company Colstrip Project), Series 1992, 6.800%, 3/01/22
26
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
NEVADA - 6.7%
Director of the State of Nevada, Department of Business and
Industry, Las Vegas Monorail Project Revenue Bonds, 1st Tier
Series 2000:
$ 15,000 5.625%, 1/01/34 1/10 at 102.00 AAA $ 15,777,300
13,000 5.375%, 1/01/40 1/10 at 100.00 AAA 13,293,540
2,875 Nevada Housing Division, Single Family Mortgage Bonds, 4/04 at 102.00 Aa2 2,996,325
1994 Senior Series B-1, 6.700%, 10/01/17
2,225 Nevada Housing Division, Single Family Mortgage Bonds, 4/04 at 102.00 Aa2 2,299,894
1994 Senior Series B-2, 6.950%, 10/01/26 (Alternative
Minimum Tax)
40,285 Reno, Nevada, Capital Improvement Revenue Bonds, 6/12 at 100.00 AAA 41,487,104
Series 2002, 5.375%, 6/01/32
10,000 Reno, Nevada, Sales and Room Tax Revenue Bonds, Reno 6/12 at 100.00 AAA 10,074,900
Transportation Rail Access Corridor Project, Senior Lien
Series 2002, 5.125%, 6/01/27
------------------------------------------------------------------------------------------------------------------------------------
NEW HAMPSHIRE - 0.4%
4,950 New Hampshire Higher Educational and Health Facilities 1/03 at 102.00 AAA 5,075,037
Authority, Hospital Revenue Bonds, Lakes Region Hospital
Association Issue, Series 1993, 5.750%, 1/01/11
------------------------------------------------------------------------------------------------------------------------------------
NEW YORK - 8.0%
8,685 Long Island Power Authority, New York, Electric System General 6/08 at 101.00 AAA 9,076,780
Revenue Bonds, Series 1998A, 5.300%, 12/01/19
10,000 Metropolitan Transportation Authority, New York, Dedicated Tax 11/11 at 100.00 AAA 10,032,200
Fund Bonds, Series 2001A, 5.000%, 11/15/31
10,000 New York City Municipal Water Finance Authority, New York, 6/06 at 101.00 AAA 10,880,800
Water and Sewer System Revenue Bonds, Fiscal 1996 Series B,
5.750%, 6/15/26
15,000 New York City Municipal Water Finance Authority, New York, 6/06 at 101.00 AAA 15,324,900
Water and Sewer System Revenue Bonds, Fiscal 1997 Series A,
5.375%, 6/15/26
Dormitory Authority of the State of New York, City University
System Consolidated Third General Resolution Revenue Bonds, 1994
Series 2:
3,000 6.250%, 7/01/19 (Pre-refunded to 7/01/04) 7/04 at 100.00 AAA 3,221,490
6,400 6.750%, 7/01/24 (Pre-refunded to 7/01/04) 7/04 at 102.00 AAA 7,049,216
5,000 New York State Urban Development Corporation, Correctional 1/07 at 102.00 AAA 5,372,300
Capital Facilities Revenue Bonds, Series 7, 5.700%, 1/01/27
15,600 Port Authority of New York and New Jersey, Consolidated 1/05 at 101.00 AAA 16,907,592
Bonds, Ninety-Seventh Series, 6.650%, 1/15/23 (Alternative
Minimum Tax)
25,000 Triborough Bridge and Tunnel Authority, New York, Subordinate 11/12 at 100.00 AAA 25,087,500
Revenue Refunding Bonds, Series 2002E, 5.000%, 11/15/32
(DD, settling 12/02/02)
------------------------------------------------------------------------------------------------------------------------------------
OHIO - 3.9%
20,100 County of Lucas, Ohio, Hospital Revenue Bonds, Series 1999 11/09 at 101.00 AAA 20,698,377
(ProMedica Healthcare Obligated Group), 5.375%, 11/15/39
5,645 Ohio Housing Finance Agency, Residential Mortgage Revenue 3/05 at 102.00 Aaa 5,982,684
Bonds, GNMA Mortgage-Backed Securities Program,
1995 Series A-2, 6.625%, 3/01/26 (Alternative Minimum Tax)
Ohio Air Quality Development Authority, Air Quality Development
Revenue Refunding Bonds (JMG Funding Limited Partnership
Project), Series 1994:
13,750 6.375%, 1/01/29 (Alternative Minimum Tax) 10/04 at 102.00 AAA 14,981,175
8,000 6.375%, 4/01/29 (Alternative Minimum Tax) 10/04 at 102.00 AAA 8,716,320
------------------------------------------------------------------------------------------------------------------------------------
OKLAHOMA - 1.7%
14,930 Oklahoma Housing Finance Agency, GNMA Collateralized Single No Opt. Call AAA 16,526,614
Family Mortgage Revenue Bonds, Series 1987A, 7.997%, 8/01/18
(Alternative Minimum Tax)
5,245 Oklahoma Industries Authority, Revenue Bonds, Oklahoma Medical 2/11 at 100.00 Aaa 5,323,465
Research Foundation Project, Series 2001, 5.250%, 2/01/21
------------------------------------------------------------------------------------------------------------------------------------
OREGON - 0.3%
3,460 State of Oregon Housing and Community Services Department, 7/05 at 102.00 Aa2 3,615,492
Mortgage Revenue Bonds (Single-Family Mortgage Program),
1995 Series A, 6.450%, 7/01/26 (Alternative Minimum Tax)
27
Nuveen Insured Municipal Opportunity Fund, Inc. (NIO) (continued)
Portfolio of INVESTMENTS October 31, 2002
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA - 1.0%
$ 7,120 Lehigh County General Purpose Authority, Pennsylvania, 7/04 at 102.00 AAA $ 7,780,309
Hospital Revenue Bonds, Lehigh Valley Hospital, Series 1994A,
6.250%, 7/01/22 (Pre-refunded to 7/01/04)
5,250 City of Philadelphia, Pennsylvania, Water and Wastewater 11/12 at 100.00 AAA 5,391,803
Revenue Bonds, Series 2001A, 5.250%, 11/01/24
------------------------------------------------------------------------------------------------------------------------------------
RHODE ISLAND - 2.0%
2,195 Providence Housing Development Corporation, Rhode Island, 7/04 at 102.00 AAA 2,293,599
Mortgage Revenue Refunding Bonds, Series 1994A (FHA-Insured
Mortgage Loan - Barbara Jordan Apartments Project),
6.750%, 7/01/25
20,475 Rhode Island Depositors Economic Protection Corporation, 2/11 at 100.00 AAA 22,905,587
Special Obligation Refunding Bonds, 1992 Series B,
5.250%, 8/01/21 (Pre-refunded to 2/01/11)
------------------------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA - 2.8%
Piedmont Municipal Power Agency, South Carolina, Electric
Revenue Bonds, 1988 Refunding Series:
9,190 0.000%, 1/01/13 (Pre-refunded to 1/01/10) 1/10 at 79.60 AAA 5,515,470
12,810 0.000%, 1/01/13 No Opt. Call AAA 8,196,991
17,300 South Carolina Jobs-Economic Development Authority, Hospital 8/03 at 102.00 AAA 17,762,256
Revenue Bonds, South Carolina Baptist Hospital, Series 1993D,
5.550%, 8/01/21
South Carolina Jobs-Economic Development Authority, Hospital
Revenue Bonds, Oconee Memorial Hospital, Inc., Series 1995:
3,000 6.150%, 3/01/15 3/05 at 102.00 AAA 3,259,260
600 6.150%, 3/01/25 3/05 at 102.00 AAA 651,954
------------------------------------------------------------------------------------------------------------------------------------
TENNESSEE - 0.5%
6,455 Memphis-Shelby County Airport Authority, Tennessee, Airport 3/11 at 100.00 AAA 6,737,084
Revenue Bonds, Series 2001A, 5.500%, 3/01/18 (Alternative
Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
TEXAS - 18.7%
22,650 Brazos River Authority, Texas, Revenue Refunding Bonds 5/08 at 102.00 AAA 23,608,548
(Houston Industries Incorporated Project), Series 1998C,
5.125%, 5/01/19 (Optional put 5/01/08)
11,500 Capital Area Housing Finance Corporation, Texas, Single Family 4/12 at 106.00 AAA 12,009,680
Mortgage Revenue Bonds, 2002 Series A-2 Refunding,
3.500%, 4/01/35 (Alternative Minimum Tax)
11,460 Dallas County Utility and Reclamation District, Texas, Unlimited 2/05 at 100.00 AAA 12,150,350
Tax Refunding Bonds, Series 1999B, 5.875%, 2/15/29
25,000 Harris County-Houston Sports Authority, Texas, Junior Lien 11/11 at 100.00 AAA 25,440,500
Revenue Refunding Bonds, Series 2001B, 5.250%, 11/15/40
Harris County, Texas, Toll Road Senior Lien Revenue Bonds,
Series 1989:
9,000 0.000%, 8/15/18 (Pre-refunded to 8/15/09) 8/09 at 53.84 AAA 3,760,110
39,000 0.000%, 8/15/19 (Pre-refunded to 8/15/09) 8/09 at 50.26 AAA 15,210,000
7,280 0.000%, 8/15/20 (Pre-refunded to 8/15/09) 8/09 at 46.91 AAA 2,653,997
5,085 0.000%, 8/15/21 (Pre-refunded to 8/15/09) 8/09 at 43.80 AAA 1,728,188
6,570 City of Houston, Texas, General Obligation Public Improvement 3/11 at 100.00 AAA 6,935,029
Bonds, Series 2001A, 5.375%, 3/01/19
4,170 City of Houston, Texas, Airport System Subordinate Lien Revenue 7/10 at 100.00 AAA 4,326,667
Bonds, Series 2000B, 5.500%, 7/01/30
20,000 City of Houston, Texas, Airport System Subordinate Lien Revenue 7/12 at 100.00 AAA 19,877,800
Bonds, Series 2002A, 5.125%, 7/01/32 (Alternative Minimum Tax)
8,225 City of Houston, Texas, Airport System Subordinate Lien Revenue 7/07 at 100.00 AAA 8,279,367
Bonds, Series 1997 Refunding, 5.125%, 7/01/22
17,500 City of Houston, Texas, Hotel Occupancy Tax and Special Revenue 9/11 at 100.00 AAA 17,839,325
Bonds (Convention Project), Series 2001B, 5.250%, 9/01/33
12,826 Houston Housing Finance Corporation, Texas, Multifamily Housing 9/11 at 105.00 Aaa 14,370,250
Revenue Bonds, RRG Apartments Project, GNMA Collateralized
Mortgage, Series 2001, 6.350%, 3/20/42
23,865 Jefferson County Health Facilities Development Corporation, 8/11 at 100.00 AAA 24,554,460
Texas, FHA-Insured Mortgage Revenue Bonds, Baptist Hospital
of Southeast Texas, Series 2001, 5.500%, 8/15/41
8,205 Lower Colorado River Authority, Texas, Refunding and Improvement 5/11 at 100.00 AAA 8,281,471
Revenue Bonds, Series 2001A, 5.000%, 5/15/21
28
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
TEXAS (continued)
Port of Houston Authority of Harris County, Texas, Unlimited Tax
General Obligation Port Improvement Bonds, Series 2001B:
$ 3,205 5.500%, 10/01/18 (Alternative Minimum Tax) 10/11 at 100.00 AAA $ 3,353,039
3,375 5.500%, 10/01/19 (Alternative Minimum Tax) 10/11 at 100.00 AAA 3,518,471
7,205 City of San Antonio, Texas, Airport System Improvement Revenue 7/11 at 101.00 AAA 7,610,425
Bonds, Series 2001, 5.375%, 7/01/15 (Alternative Minimum Tax)
Tarrant County Health Facilities Development Corporation, Texas,
Texas Health Resources System Revenue Bonds, Series 1997A:
2,900 5.250%, 2/15/22 2/08 at 102.00 AAA 2,909,338
6,500 5.000%, 2/15/26 2/08 at 101.00 AAA 6,312,280
13,590 Texas Department of Housing and Community Affairs, Single 9/06 at 102.00 AAA 14,139,580
Family Mortgage Revenue Bonds, 1996 Series D,
6.250%, 9/01/28 (Alternative Minimum Tax)
1,840 Ysleta Independent School District, Texas, Public Facility 11/09 at 100.00 AAA 1,876,653
Corporation, Lease Revenue Refunding Bonds, Series 2001,
5.375%, 11/15/24
------------------------------------------------------------------------------------------------------------------------------------
UTAH - 0.5%
5,740 Utah Housing Finance Agency, Multifamily Housing Refunding 1/03 at 101.00 AA 5,862,606
Bonds, 1992 Issue A (FHA-Insured Mortgage Loans),
7.400%, 7/01/24
740 Utah Housing Finance Agency, Single Family Mortgage Bonds, 7/04 at 102.00 Aaa 763,088
1994 Issue D (Federally Insured or Guaranteed Mortgage
Loans), 6.750%, 1/01/27 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
VIRGINIA - 0.8%
10,000 Virginia Housing Development Authority, Commonwealth Mortgage 7/11 at 100.00 AAA 10,242,700
Bonds, 2001 Series H, Subseries H-1, 5.375%, 7/01/36
------------------------------------------------------------------------------------------------------------------------------------
WASHINGTON - 1.7%
3,195 Kitsap County, Washington, Limited Tax General Obligation Bonds, 7/10 at 100.00 AAA 3,315,036
Series 2000, 5.500%, 7/01/25
4,250 Public Utility District No. 1 of Snohomish County, Washington, 1/03 at 101.00 AAA 4,894,470
Generation System Revenue Bonds, Series 1989, 6.650%, 1/01/16
4,345 Washington Public Power Supply System, Nuclear Project No. 1 7/07 at 102.00 AAA 4,587,972
Refunding Revenue Bonds, Series 1997A, 5.125%, 7/01/17
8,500 Washington Public Power Supply System, Nuclear Project No. 3 7/03 at 102.00 AAA 8,824,785
Refunding Revenue Bonds, Series 1993B, 5.600%, 7/01/17
------------------------------------------------------------------------------------------------------------------------------------
WEST VIRGINIA - 0.8%
10,000 County Commission of Harrison County, West Virginia, 5/03 at 102.00 AAA 10,391,000
Solid Waste Disposal Revenue Bonds (West Penn Power
Company Harrison Station Project), Series B, 6.300%, 5/01/23
(Alternative Minimum Tax)
29
Nuveen Insured Municipal Opportunity Fund, Inc. (NIO) (continued)
Portfolio of INVESTMENTS October 31, 2002
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
WISCONSIN - 2.9%
$ 1,765 Wisconsin Housing and Economic Development Authority, 1/03 at 101.00 AAA $ 1,802,948
Housing Revenue Bonds, 1992 Series A, 6.850%, 11/01/12
15,000 Wisconsin Health and Educational Facilities Authority, Revenue 2/07 at 102.00 AAA 15,825,150
Bonds, Series 1997 (Marshfield Clinic Project), 5.750%, 2/15/27
18,000 Wisconsin Health and Educational Facilities Authority, Revenue 8/07 at 102.00 AAA 19,045,260
Bonds, Series 1997 (Aurora Health Care, Inc.), 5.250%, 8/15/17
------------------------------------------------------------------------------------------------------------------------------------
WYOMING - 0.9%
11,200 Wyoming Community Development Authority, Housing Revenue 12/07 at 101.50 AAA 11,506,767
Bonds, 1997 Series 6, 5.600%, 6/01/29
------------------------------------------------------------------------------------------------------------------------------------
$ 2,045,690 Total Long-Term Investments (cost $1,793,426,324) - 149.8% 1,922,698,119
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 3.2% 40,655,080
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (53.0)% (680,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $1,283,353,199
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares.
All of the bonds in the portfolio are either covered by
Original Issue Insurance, Secondary Market Insurance or
Portfolio Insurance, or are backed by an escrow or trust
containing sufficient U.S. Government or U.S. Government
agency securities, any of which ensure the timely payment of
principal and interest.
* Optional Call Provisions (not covered by the report of
independent auditors): Dates (month and year) and
prices of the earliest optional call or redemption.
There may be other call provisions at varying prices at
later dates.
** Ratings (not covered by the report of independent
auditors): Using the higher of Standard & Poor's or
Moody's rating.
(DD) Security purchased on a delayed delivery basis.
See accompanying notes to financial statements.
30
Nuveen Premier Insured Municipal Income Fund, Inc. (NIF)
Portfolio of
INVESTMENTS October 31, 2002
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
ALABAMA - 0.8%
$ 2,450 BMC Special Care Facilities Financing Authority of the City of 12/02 at 102.00 AAA $ 2,508,065
Montgomery, Alabama, Revenue Bonds, Series 1992-B (Baptist
Medical Center), 6.700%, 12/01/10
------------------------------------------------------------------------------------------------------------------------------------
ALASKA - 1.0%
2,890 Alaska Housing Finance Corporation, Governmental Purpose Bonds, 12/05 at 102.00 AAA 2,964,360
1995 Series A, 5.875%, 12/01/24
------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA - 37.6%
ABAG Finance Authority for Nonprofit Corporations, Insured
Certificates of Participation (Children's Hospital Medical
Center of Northern California), Series 1999:
6,750 5.875%, 12/01/19 12/09 at 101.00 AAA 7,534,890
10,000 6.000%, 12/01/29 12/09 at 101.00 AAA 11,333,100
4,755 Antioch Area Public Facilities Financing Agency, California, 8/09 at 101.00 AAA 5,058,274
Special Tax Bonds, Community Facilities District No. 1989-1,
5.700%, 8/01/22
3,250 California Pollution Control Financing Authority, Pollution Control 4/11 at 102.00 AAA 3,441,523
Refunding Revenue Bonds, Pacific Gas and Electric Company,
1996A Remarketed, 5.350%, 12/01/16 (Alternative Minimum Tax)
11,070 Foothill/Eastern Transportation Corridor Agency, California, 1/10 at 100.00 AAA 11,095,682
Toll Road Revenue Bonds, Series 1995A, 5.000%, 1/01/35
680 Housing Authority of the County of Kern, California, Guaranteed No Opt. Call AAA 773,187
Mortgage Obligations, 1994 Series A, Subseries I,
7.150%, 12/30/24 (Alternative Minimum Tax)
425 Housing Authority of the County of Kern, California, Guaranteed No Opt. Call AAA 484,980
Mortgage Obligations, 1994 Series A Subseries III,
7.450%, 6/30/25 (Alternative Minimum Tax)
5,530 La Verne-Grand Terrace Housing Finance Agency, California, No Opt. Call AAA 8,045,708
Single Family Residential Mortgage Revenue Bonds,
1984 Series A, 10.250%, 7/01/17
5,840 Lancaster Redevelopment Agency, California, Lancaster Residential 2/03 at 101.50 AAA 5,980,569
Redevelopment Project Area, Tax Allocation Refunding Bonds,
Issue of 1992, 6.100%, 8/01/19
11,080 City of Lodi, California, Electric System Revenue Certificates 1/09 at 40.71 AAA 3,607,205
of Participation, 1999 Series B, 0.000%, 1/15/24
(Pre-refunded to 1/15/09)
5,000 Ontario Redevelopment Financing Authority, San Bernardino No Opt. Call AAA 6,752,250
County, California, 1995 Revenue Refunding Bonds, Project
No. 1, 7.400%, 8/01/25
8,880 City of Pomona, California, Single Family Mortgage Revenue No Opt. Call AAA 11,711,654
Refunding Bonds (GNMA and FHLMC Mortgage-Backed
Securities), Series 1990B, 7.500%, 8/01/23
10,305 City of San Bernardino, California, Single Family Mortgage No Opt. Call AAA 13,612,493
Revenue Refunding Bonds (GNMA Mortgage-Backed Securities),
Series 1990A, 7.500%, 5/01/23
14,755 County of San Bernardino, California, Single Family No Opt. Call AAA 19,049,148
Mortgage Revenue Bonds (GNMA Mortgage-Backed Securities),
1988 Series A, 8.300%, 9/01/14 (Alternative Minimum Tax)
4,300 Airports Commission of the City and County of San Francisco, 5/11 at 100.00 AAA 4,368,112
California, San Francisco International Airport, Second Series
Revenue Refunding Bonds, Issue 27A, 5.125%, 5/01/19
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
COLORADO - 2.6%
6,000 E-470 Public Highway Authority, Colorado, Senior Revenue 9/10 at 102.00 AAA 6,510,420
Bonds, Series 2000A, 5.750%, 9/01/29
1,225 Summit School District RE-1, Summit County, Colorado, General 12/04 at 100.00 AAA 1,347,708
Obligation Improvement Bonds, Series 1994, 6.700%, 12/01/14
(Pre-refunded to 12/01/04)
------------------------------------------------------------------------------------------------------------------------------------
FLORIDA - 4.8%
4,145 City of Miami, Florida, General Obligation Bonds, Series 2002, 1/12 at 100.00 AAA 4,194,906
5.000%, 1/01/22
9,985 Orange County, Florida, Sales Tax Revenue Bonds, Series 2002B, 1/13 at 100.00 AAA 10,166,527
5.125%, 1/01/32 (WI, settling 11/07/02)
31
Nuveen Premier Insured Municipal Income Fund, Inc. (NIF) (continued)
Portfolio of INVESTMENTS October 31, 2002
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
GEORGIA - 5.7%
$ 10,000 Development Authority of Burke County, Georgia, Pollution 1/03 at 103.00 AAA $ 10,404,300
Control Revenue Bonds (Oglethorpe Power Corporation
Vogtle Project), Series 1992, 8.000%, 1/01/15 (Pre-refunded
to 1/01/03)
6,500 The Medical Center Hospital Authority, Georgia, Revenue 8/09 at 102.00 AAA 6,771,960
Anticipation Certificates (Columbus Regional Healthcare
System, Inc. Project), Series 1999, 5.500%, 8/01/25
------------------------------------------------------------------------------------------------------------------------------------
HAWAII - 3.9%
8,030 State of Hawaii, Airports System Revenue Bonds, Refunding 7/10 at 101.00 AAA 9,324,998
Series 2000B, 6.500%, 7/01/15 (Alternative Minimum Tax)
2,250 Department of Budget and Finance of the State of Hawaii, 1/09 at 101.00 AAA 2,490,525
Special Purpose Revenue Bonds (Hawaii Electric Company, Inc.
and Subsidiaries Project), Series 1999D, 6.150%, 1/01/20
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
ILLINOIS - 20.3%
10,000 City of Chicago, Illinois, General Obligation Refunding Bonds, 1/10 at 101.00 AAA 10,393,700
Series 2000D, 5.500%, 1/01/35
8,200 Board of Education of the City of Chicago, Illinois, General No Opt. Call AAA 9,792,358
Obligation Lease Certificates, 1992 Series A, 6.250%, 1/01/15
23,110 Illinois Development Finance Authority, Local Government Program No Opt. Call Aaa 11,512,247
Bonds, Elgin School District No. U46, Kane, Cook and DuPage
Counties, Series 2002, 0.000%, 1/01/17
10,010 Illinois Development Finance Authority, Revenue Bonds, Catholic 2/05 at 102.00 AAA 10,340,130
Health Partners Services, Series 1995A, 5.300%, 2/15/18
10,150 Onterie Center Housing Finance Corporation, Mortgage Revenue 1/03 at 102.00 AAA 10,487,488
Refunding Bonds (An Illinois Not For Profit Corporation),
Series 1992A (FHA-Insured Mortgage Loan - Onterie Center
Project), 7.050%, 7/01/27
3,225 Regional Transportation Authority, Cook, DuPage, Kane, Lake, No Opt. Call AAA 4,254,613
McHenry and Will Counties, Illinois, General Obligation Bonds,
Series 1992A, 9.000%, 6/01/09
4,000 Public Building Commission of St. Clair County, Illinois, Public 12/02 at 102.00 AAA 4,094,680
Building Revenue Bonds, Series 1992, 6.350%, 12/01/09
(Alternative Minimum Tax) (Pre-refunded to 12/01/02)
------------------------------------------------------------------------------------------------------------------------------------
INDIANA - 1.8%
5,375 Indiana Health Facility Financing Authority, Hospital Revenue 11/02 at 102.00 AAA 5,505,129
Refunding and Improvement Bonds, Series 1992 (Community
Hospitals Projects), 6.400%, 5/01/12
------------------------------------------------------------------------------------------------------------------------------------
LOUISIANA - 3.1%
Louisiana Public Facilities Authority, Hospital Revenue Bonds
(Our Lady of Lourdes Regional Medical Center Project), Series
1992:
5,000 6.375%, 2/01/12 (Pre-refunded to 2/01/03) 2/03 at 102.00 AAA 5,158,650
4,000 6.450%, 2/01/22 (Pre-refunded to 2/01/03) 2/03 at 102.00 AAA 4,127,680
------------------------------------------------------------------------------------------------------------------------------------
MARYLAND - 1.7%
5,000 Maryland Transportation Authority, Baltimore-Washington 3/12 at 101.00 AAA 5,068,350
International Airport Parking Revenue Bonds, Series 2002B,
5.125%, 3/01/21 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS - 2.8%
8,335 Massachusetts Health and Educational Facilities Authority, 1/03 at 102.00 AAA 8,529,539
Revenue Bonds, New England Medical Center Hospitals
Issue, Series F, 6.625%, 7/01/25
------------------------------------------------------------------------------------------------------------------------------------
MICHIGAN - 4.4%
2,250 City of Kalamazoo Hospital Finance Authority, Michigan, 5/06 at 102.00 AAA 2,382,120
Hospital Revenue Refunding and Improvement Bonds (Bronson
Methodist Hospital), Series 1996, 5.750%, 5/15/16
6,500 Michigan Higher Education Student Loan Authority, Revenue No Opt. Call AAA 6,944,080
Bonds, 2000 Series XII-T, 5.300%, 9/01/10 (Alternative
Minimum Tax)
3,810 Michigan State Housing Development Authority, Limited 8/12 at 102.00 Aaa 3,933,330
Obligation Multifamily Housing Revenue Bonds, GNMA
Collateralized Program - Cranbrook Apartments, Series 2001A,
5.500%, 2/20/43 (Alternative Minimum Tax)
32
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
MINNESOTA - 2.2%
$ 4,860 Minneapolis-St. Paul Metropolitan Airports Commission, 1/11 at 100.00 AAA $ 5,283,112
Minnesota, Airport Revenue Bonds, Series 2001B,
5.750%, 1/01/15 (Alternative Minimum Tax)
1,285 Minnesota Housing Finance Agency, Rental Housing Bonds, 2/05 at 102.00 AAA 1,328,073
1995 Series D, 5.950%, 2/01/18
------------------------------------------------------------------------------------------------------------------------------------
MISSOURI - 3.4%
7,495 Industrial Development Authority of Jefferson County, 8/07 at 100.00 AAA 10,184,506
Missouri, Housing Revenue Bonds Road Apartments Project),
Series 1985, 11.000%, 12/15/15 (Pre-refunded to 8/15/07)
------------------------------------------------------------------------------------------------------------------------------------
MONTANA - 4.4%
13,000 City of Forsyth, Rosebud County, Montana, Pollution Control 3/03 at 101.00 AAA 13,307,710
Revenue Refunding Bonds (Puget Sound Power and Light
Company Colstrip Project), Series 1992, 6.800%, 3/01/22
------------------------------------------------------------------------------------------------------------------------------------
NEVADA - 7.8%
10,000 Clark County, Nevada, Airport System Subordinated Lien Revenue 7/11 at 100.00 AAA 10,147,500
Bonds, Series 2001B, 5.125%, 7/01/21
7,990 Reno, Nevada, Sales and Room Tax Revenue Bonds, Reno 6/12 at 100.00 AAA 8,137,256
Transportation Rail Access Corridor Project, Senior Lien
Series 2002, 5.250%, 6/01/41
5,050 Washoe County, Nevada, Gas and Water Facilities Refunding 1/03 at 102.00 AAA 5,220,185
Revenue Bonds, Sierra Pacific Power Company Project,
Series 1987 Remarketed, 6.300%, 12/01/14
------------------------------------------------------------------------------------------------------------------------------------
NEW YORK - 3.0%
7,645 Metropolitan Transportation Authority, New York, Transit No Opt. Call AAA 9,030,427
Facilities Revenue Bonds, Series J, 9.100%, 7/01/05
------------------------------------------------------------------------------------------------------------------------------------
OKLAHOMA - 4.2%
3,160 Oklahoma Housing Finance Agency, GNMA Collateralized No Opt. Call AAA 3,497,930
Single Family Mortgage Revenue Bonds, Series 1987A,
7.997%, 8/01/18 (Alternative Minimum Tax)
5,440 Sapulpa Municipal Authority, Oklahoma, Capital Improvement 7/10 at 101.00 AAA 5,851,264
Revenue Bonds, Series 2000 Refunding, 5.625%, 7/01/20
3,000 Tulsa Industrial Authority, Oklahoma, Multifamily Housing 11/05 at 103.00 Aaa 3,156,630
Revenue Refunding Bonds (GNMA Collateralized - Country
Club of Woodland Hills Development), Series 1995,
6.250%, 11/01/27
------------------------------------------------------------------------------------------------------------------------------------
OREGON - 1.8%
5,000 Oregon Health, Housing, Educational and Cultural Facilities 3/12 at 105.00 Aaa 5,475,150
Authority, Revenue Bonds, GNMA Mortgaged-Backed
Securities Program, Necanicum Village Assisted Living Project,
2001 Series A, 5.000%, 6/20/42
------------------------------------------------------------------------------------------------------------------------------------
TENNESSEE - 1.8%
5,000 Health and Educational Facilities Board of the Metropolitan 11/09 at 101.00 AAA 5,435,750
Government of Nashville and Davidson County, Tennessee,
Revenue Bonds (Ascension Health Credit Group), Series 1999A,
6.000%, 11/15/30
------------------------------------------------------------------------------------------------------------------------------------
TEXAS - 9.5%
5,000 Bexar County Health Facilities Development Corporation, Texas, 11/07 at 102.00 AAA 5,035,250
Revenue Refunding Bonds (Baptist Health System), Series A-1,
5.250%, 11/15/27
580 Corpus Christi Housing Finance Corporation, Texas, Single Family 1/03 at 102.00 AAA 592,859
Mortgage Senior Revenue Refunding Bonds, Series 1991A,
7.700%, 7/01/11
12,500 Cities of Dallas and Fort Worth, Texas, Dallas-Ft. Worth 11/09 at 100.00 AAA 12,875,500
International Airport, Joint Revenue Refunding and Improvement
Bonds, Series 2001A, 5.500%, 11/01/35 (Alternative Minimum Tax)
625 City of El Paso Property Finance Authority, Inc., Texas, 12/02 at 103.00 Aaa 644,494
Single Family Mortgage Revenue Bonds (GNMA Mortgage-Backed
Securities Program), Series 1992A, 8.700%, 12/01/18 (Alternative
Minimum Tax)
1,600 Harris County, Texas, Toll Road Senior Lien Revenue Refunding 12/02 at 100.00 AAA 1,606,240
Bonds, Series 1992B, 6.625%, 8/15/17 to 12/23/02)
7,600 City of San Antonio, Texas, Airport System Improvement 7/11 at 101.00 AAA 7,960,620
Revenue Bonds, Series 2001, 5.375%, 7/01/16
(Alternative Minimum Tax)
33
Nuveen Premier Insured Municipal Income Fund, Inc. (NIF) (continued)
Portfolio of INVESTMENTS October 31, 2002
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
VIRGINIA - 1.2%
$ 3,635 Virginia Housing Development Authority, Commonwealth 7/11 at 100.00 AAA $ 3,725,512
Mortgage Bonds, 2001 Series C, Subseries C-2,
5.450%, 7/01/23 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
WASHINGTON - 15.3%
5,000 Public Utility District No. 1 of Chelan County, Washington, 7/11 at 101.00 AAA 5,207,900
Chelan Hydro Consolidated System Revenue Bonds,
Series 2001B, 5.600%, 1/01/36 (Alternative Minimum Tax)
Bellevue School District No. 405, King County, Washington,
General Obligation Bonds, Series 2002:
12,060 5.000%, 12/01/19 12/12 at 100.00 AAA 12,391,288
12,785 5.000%, 12/01/20 12/12 at 100.00 AAA 13,022,801
4,715 Port of Seattle, Washington, Revenue Bonds, Series 2001B, 10/11 at 100.00 AAA 5,019,966
5.625%, 4/01/17 (Alternative Minimum Tax)
1,650 Port of Seattle, Washington, Special Facility Revenue Bonds 3/10 at 101.00 AAA 1,775,829
(Terminal 18 Project), Series 1999C, 6.000%, 9/01/29
(Alternative Minimum Tax)
1,265 City of Tacoma, Washington, General Obligation Bonds, 12/12 at 100.00 AAA 1,311,097
Series 2002, 5.000%, 12/01/18
6,990 Washington Public Power Supply System, Nuclear 7/08 at 102.00 AAA 7,383,883
Project No.1 Refunding Revenue Bonds, Series 1998A,
5.125%, 7/01/17
------------------------------------------------------------------------------------------------------------------------------------
WEST VIRGINIA - 2.0%
6,000 Mason County, West Virginia, Pollution Control Revenue Bonds 12/02 at 102.00 AAA 6,142,380
(Appalachian Power Company Project), Series I, 6.850%, 6/01/22
------------------------------------------------------------------------------------------------------------------------------------
$ 425,990 Total Long-Term Investments (cost $413,311,346) - 147.1% 442,807,750
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 6.4% 19,313,571
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (53.5)% (161,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $301,121,321
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares.
All of the bonds in the portfolio are either covered by
Original Issue Insurance, Secondary Market Insurance or
Portfolio Insurance, or are backed by an escrow or trust
containing sufficient U.S. Government or U.S. Government
agency securities, any of which ensure the timely payment of
principal and interest.
* Optional Call Provisions (not covered by the report of
independent auditors): Dates (month and year) and
prices of the earliest optional call or redemption.
There may be other call provisions at varying prices at
later dates.
** Ratings (not covered by the report of independent
auditors): Using the higher of Standard & Poor's or
Moody's rating.
(WI) Security purchased on a when-issued basis.
See accompanying notes to financial statements.
34
Nuveen Insured Premium Income Municipal Fund 2 (NPX)
Portfolio of
INVESTMENTS October 31, 2002
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
ALABAMA - 3.8%
Jefferson County, Alabama, Sewer Revenue Warrants, Series 1997D:
$ 5,000 5.700%, 2/01/20 2/07 at 101.00 AAA $ 5,265,800
8,800 5.750%, 2/01/22 2/07 at 101.00 AAA 9,522,216
2,500 City of Mobile, Alabama, General Obligation Refunding Warrants, 2/06 at 102.00 AAA 2,814,575
Series 1996, 5.750%, 2/15/16 (Pre-refunded to 2/15/06)
2,000 City of Scottsboro, Alabama, General Obligation School Warrants, 7/06 at 102.00 AAA 2,217,640
Series 1996- B, 5.750%, 7/01/14
------------------------------------------------------------------------------------------------------------------------------------
ALASKA - 0.5%
2,350 Alaska Housing Finance Corporation, Mortgage Revenue Bonds, 6/06 at 102.00 AAA 2,482,094
1996 Series A, 6.050%, 12/01/17
------------------------------------------------------------------------------------------------------------------------------------
ARIZONA - 0.9%
4,500 Salt River Project Agricultural Improvement and Power District, 1/13 at 100.00 AAA 4,501,485
Arizona, Salt River Project Electric System Revenue Bonds,
Series 2002B, 5.000%, 1/01/31 (DD, settling 11/01/02)
------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA - 7.7%
6,450 California Housing Finance Agency, Multi-Unit Rental Housing 2/03 at 102.00 Aa2 6,603,123
Revenue Bonds, Series 1992A-II, 6.625%, 2/01/24
(Alternative Minimum Tax)
31,200 Foothill/Eastern Transportation Corridor Agency, California, 1/10 at 24.23 AAA 5,117,424
Toll Road Refunding Revenue Bonds, Series 1999,
0.000%, 1/15/34
6,850 County of Orange, California, 1996 Recovery Certificates of 7/06 at 102.00 AAA 7,759,954
Participation, Series A, 6.000%, 7/01/26
13,000 Sacramento City Financing Authority, California, Capital 12/09 at 102.00 AAA 14,475,630
Improvement Revenue Bonds, Series 1999 Solid Waste and
Redevelopment Projects, 5.800%, 12/01/19
San Leandro Housing Finance Corporation, California, Mortgage
Revenue Refunding Bonds, Series 1993A (FHA-Insured Mortgage Loan
- Ashland Village Apartments Section 8 Assisted Project):
1,270 6.550%, 1/01/12 1/03 at 101.00 AAA 1,297,292
5,100 6.650%, 1/01/25 1/03 at 101.00 AAA 5,193,024
------------------------------------------------------------------------------------------------------------------------------------
COLORADO - 3.8%
Colorado Health Facilities Authority, Hospital Revenue Bonds
(Poudre Valley Health Care, Inc.), Series 1999A:
2,480 5.625%, 12/01/19 12/09 at 101.00 Aaa 2,631,826
3,500 5.750%, 12/01/23 12/09 at 101.00 Aaa 3,719,240
12,955 City and County of Denver, Colorado, Airport System Revenue 11/05 at 102.00 AAA 13,568,419
Bonds, Series 1995A, 5.600%, 11/15/20
------------------------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA - 0.7%
3,540 District of Columbia Housing Finance Agency, Collateralized 6/03 at 102.00 AAA 3,612,181
Single Family Mortgage Revenue Bonds, Series 1990C-4,
6.350%, 12/01/24 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
GEORGIA - 0.6%
3,000 Valdosta and Lowndes County Hospital Authority, Georgia, 10/12 at 101.00 AAA 3,063,810
Series 2002, South Georgia Medical Center Project Revenue
Certificates, 5.200%, 10/01/22
------------------------------------------------------------------------------------------------------------------------------------
HAWAII - 8.2%
State of Hawaii, Airports System Revenue Bonds, Refunding
Series 2000B:
6,105 6.100%, 7/01/16 (Alternative Minimum Tax) 7/10 at 101.00 AAA 6,859,883
9,500 6.625%, 7/01/17 (Alternative Minimum Tax) 7/10 at 101.00 AAA 11,082,130
24,000 Department of Budget and Finance of the State of Hawaii, 7/10 at 101.00 AAA 25,311,360
Special Purpose Revenue Bonds, Hawaiian Electric Company,
Inc. and Subsidiary Projects), Refunding Series 2000,
5.700%, 7/01/20 (Alternative Minimum Tax)
35
Nuveen Insured Premium Income Municipal Fund 2 (NPX) (continued)
Portfolio of INVESTMENTS October 31, 2002
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
IDAHO - 0.4%
$ 1,790 Idaho Housing and Finance Association, Single Family Mortgage 1/08 at 101.50 AAA $ 1,881,290
Bonds, 1998 Series E, 5.450%, 7/01/18 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
ILLINOIS - 18.8%
2,500 City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois, 1/05 at 100.00 AAA 2,700,650
General Obligation Corporate Purpose Bonds, Series 1996,
5.800%, 1/01/14 (Pre-refunded to 1/01/05)
1,500 City of Chicago, Illinois, General Obligation Bonds, Series 1995, 7/05 at 102.00 AAA 1,685,985
6.125%, 1/01/16 (Pre-refunded to 7/01/05)
25,585 City of Chicago, Illinois, General Obligation Bonds, Project and 1/06 at 102.00 AAA 25,677,618
Refunding Series 1996B, 5.125%, 1/01/25
8,370 City of Chicago, Illinois, Chicago Midway Airport Revenue Bonds, 1/07 at 101.00 AAA 9,049,811
Series 1996A, 5.625%, 1/01/17
City of Chicago, Illinois, Chicago Midway Airport Revenue Bonds,
1994 Series A:
280 6.100%, 1/01/08 (Alternative Minimum Tax) 1/04 at 102.00 AAA 292,838
710 6.250%, 1/01/14 (Alternative Minimum Tax) 1/04 at 102.00 AAA 752,103
8,235 City of Chicago, Illinois, Chicago-O'Hare International Airport, 1/05 at 102.00 AAA 8,983,314
General Airport Second Lien Revenue Refunding Bonds,
1994 Series A, 6.375%, 1/01/15
10,000 City of Chicago, Illinois, Chicago-O'Hare International Airport, 1/10 at 101.00 AAA 10,487,600
General Airport Second Lien Revenue Refunding Bonds,
1999 Series, 5.500%, 1/01/17 (Alternative Minimum Tax)
4,115 Chicago Park District, Illinois, General Obligation Limited Tax Park 7/11 at 100.00 AAA 4,430,291
Bonds, Series 2001C, 5.500%, 1/01/18
9,680 Illinois Educational Facilities Authority, Chicago, Columbia College 6/08 at 100.00 AAA 9,804,194
Revenue Bonds, Series 1998, 5.000%, 12/01/20
1,950 Illinois Health Facilities Authority, Health Facilities Refunding No Opt. Call AAA 2,367,827
Revenue Bonds (SSM Health Care), Series 1992AA,
6.550%, 6/01/14
Illinois Health Facilities Authority, Revenue Bonds (Lutheran
General Health System), Series 1993A:
4,355 6.125%, 4/01/12 No Opt. Call AAA 4,972,931
5,000 6.250%, 4/01/18 No Opt. Call AAA 5,997,350
2,815 Illinois Housing Development Authority, Housing Development 1/04 at 102.00 A+ 2,901,533
Bonds, 1993 Series A, 6.000%, 7/01/18
1,770 Illinois Health Facilities Authority, Revenue Bonds, Series 1991 1/03 at 101.00 AAA 1,802,391
(Elmhurst Memorial Hospital), 6.625%, 1/01/22
6,335 Metropolitan Pier and Exposition Authority, Illinois, McCormick 6/03 at 102.00 AAA 6,651,497
Place Expansion Project Bonds, Series 1992A,
6.500%, 6/15/22 (Pre-refunded to 6/15/03)
1,275 City of Peoria, City of Moline and City of Freeport, Illinois, 10/05 at 105.00 AAA 1,380,098
Collateralized Single Family Mortgage Revenue Bonds,
Series 1995A, 7.600%, 4/01/27 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
INDIANA - 1.6%
1,000 Fort Wayne South Side School Building Corporation, Allen 1/04 at 102.00 AAA 1,071,980
County, Indiana, First Mortgage Bonds, Series 1994,
6.125%, 1/15/12 (Pre-refunded to 1/15/04)
2,220 Indiana Municipal Power Agency, Power Supply System Revenue 1/03 at 102.00 AAA 2,280,251
Bonds, 1993 Series A, 6.125%, 1/01/19
5,285 Logansport School Building Corporation, Indiana, First Mortgage 7/11 at 100.00 AAA 5,344,509
Bonds, Series 2001, 5.125%, 1/15/22
------------------------------------------------------------------------------------------------------------------------------------
KANSAS - 0.2%
400 City of Olathe, Kansas and Labette County, Kansas, Collateralized 2/05 at 105.00 Aaa 431,248
Single Family Mortgage Refunding Revenue Bonds, Series A-I,
8.100%, 8/01/23 (Alternative Minimum Tax)
815 Sedgwick County and Shawnee County, Kansas, Collateralized 11/04 at 105.00 Aaa 880,265
Single Family Mortgage Refunding Revenue Bonds, Series A-II,
8.050%, 5/01/24 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
KENTUCKY - 1.1%
23,340 Kentucky Economic Development Finance Authority, Health System No Opt. Call AAA 5,681,423
Revenue Bonds, Norton Healthcare Inc., Series 2000B,
0.000%, 10/01/28
36
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS - 3.4%
$ 5,000 Massachusetts Housing Finance Agency, Housing Project Revenue 4/03 at 102.00 AAA $ 5,124,550
Bonds, Series 1993A Refunding, 6.150%, 10/01/15
5,630 Massachusetts Housing Finance Agency, Single Family Housing 6/06 at 102.00 AAA 5,897,763
Revenue Bonds, Series 48, 6.350%, 6/01/26 (Alternative
Minimum Tax)
4,265 Massachusetts Housing Finance Agency, Single Family Housing 6/07 at 102.00 AAA 4,456,797
Revenue Bonds, Series 53, 6.150%, 12/01/29 (Alternative
Minimum Tax)
2,550 Massachusetts Housing Finance Agency, Rental Housing Mortgage 1/03 at 100.00 AAA 2,551,199
Revenue Bonds, Series 2001A, 6.000%, 1/01/43 (Alternative
Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
MICHIGAN - 6.7%
4,705 Board of Control of Grand Valley State University, Michigan, 12/10 at 100.00 AAA 4,885,202
General Revenue Bonds, Series 2000, 5.250%, 12/01/20
9,250 Michigan Public Power Agency, Belle River Project Refunding 1/03 at 102.00 AAA 9,460,068
Revenue Bonds, 1993 Series A, 5.250%, 1/01/18
10,000 Michigan State Housing Development Authority, Rental Housing 4/07 at 102.00 AAA 10,531,500
Revenue Bonds, 1997 Series A, 6.000%, 4/01/16 (Alternative
Minimum Tax)
10,000 County of Monroe, Michigan, Pollution Control Revenue Bonds 9/03 at 102.00 AAA 10,523,500
(The Detroit Edison Company Project), Series CC-1992,
6.550%, 9/01/24 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
MINNESOTA - 1.5%
7,775 Minnesota Housing Finance Agency, Rental Housing Bonds, 2/05 at 102.00 AAA 8,035,618
1995 Series D, 5.950%, 2/01/18
------------------------------------------------------------------------------------------------------------------------------------
MISSOURI - 1.6%
1,000 Industrial Development Authority of the City of Hazelwood, 9/06 at 102.00 AAA 1,057,010
Missouri, Multifamily Housing Revenue Refunding Bonds
(GNMA Collateralized - The Lakes Apartments Project),
Series 1996, 6.000%, 9/20/16
4,500 Land Clearance for Redevelopment Authority of Kansas City, 12/05 at 102.00 AAA 4,954,005
Missouri, Lease Revenue Bonds, Municipal Auditorium and
Muehlebach Hotel Redevelopment Projects, Series 1995A,
5.900%, 12/01/18
1,000 Kansas City Municipal Assistance Corporation, Missouri, 1/06 at 101.00 AAA 1,090,530
Leasehold Revenue Bonds, Capital Improvement Series 1996B,
5.750%, 1/15/14
1,030 Missouri Housing Development Commission, Multifamily Housing 12/06 at 102.00 AAA 1,093,057
Revenue Bonds (Brookstone Village Apartments Project),
1996 Series A, 6.000%, 12/01/16 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
NEVADA - 7.9%
5,000 Clark County, Nevada, Industrial Development Revenue Bonds 12/02 at 102.00 AAA 5,173,500
(Nevada Power Company Project), Series 1992A, 6.700%, 6/01/22
(Alternative Minimum Tax)
5,000 Clarke County, Nevada, Industrial Development Revenue Bonds, 7/10 at 102.00 AAA 5,414,800
Series 2000C (Southwest Gas Corporation), 5.950%, 12/01/38
(Alternative Minimum Tax)
5,500 Director of the State of Nevada, Department of Business and 1/10 at 102.00 AAA 5,789,135
Industry, Revenue Bonds (Las Vegas Monorail Project), 1st Tier
Series 2000, 5.625%, 1/01/32
Las Vegas Convention and Visitors Authority, Nevada, Revenue
Bonds, Series 1999:
2,695 5.750%, 7/01/15 7/09 at 101.00 AAA 3,025,272
6,035 5.750%, 7/01/16 7/09 at 101.00 AAA 6,774,589
6,500 5.750%, 7/01/17 7/09 at 101.00 AAA 7,175,285
3,535 7/01/18 7/09 at 101.00 AAA 3,880,546
4,000 6.000%, 7/01/19 7/09 at 101.00 AAA 4,495,800
------------------------------------------------------------------------------------------------------------------------------------
NEW YORK - 17.1%
4,090 Metropolitan Transportation Authority, New York, Commuter No Opt. Call AAA 5,035,240
Facilities Revenue Bonds, Series 1994A, 8.000%, 7/01/07
4,985 Metropolitan Transportation Authority, New York, Transit No Opt. Call AAA 6,137,083
Facilities Revenue Bonds, Series O, 8.000%, 7/01/07
County of Nassau, New York, General Improvement Bonds, Series E:
1,755 6.000%, 3/01/16 3/10 at 100.00 AAA 1,971,918
2,740 6.000%, 3/01/18 3/10 at 100.00 AAA 3,069,430
37
Nuveen Insured Premium Income Municipal Fund 2 (NPX) (continued)
Portfolio of INVESTMENTS October 31, 2002
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
NEW YORK (continued)
$ 2,265 County of Nassau, New York, General Obligations, Serial 3/10 at 100.00 AAA $ 2,754,874
General Improvement Bonds, Series F, 7.000%, 3/01/14
7,500 Nassau Health Care Corporation, Nassau County, New York, 8/09 at 102.00 AAA 8,171,700
Health System Revenue Bonds (Guaranteed), Series 1999,
5.750%, 8/01/29
4,000 City of New York, New York, General Obligation Bonds, No Opt. Call AAA 4,605,960
Fiscal 1995 Series E, 8.000%, 8/01/05
7,900 City of New York, New York, General Obligation Bonds, 3/06 at 101.50 AAA 8,636,675
Fiscal 1996 Series I, 5.875%, 3/15/18
7,000 New York City Municipal Water Finance Authority, New York, 6/09 at 101.00 AAA 7,617,190
Water and Sewer System Revenue Bonds, Fiscal 2000 Series A,
5.750%, 6/15/31
Dormitory Authority of the State of New York, New Island
Hospital Insured Revenue Bonds, Series 1999B:
3,400 5.750%, 7/01/19 7/09 at 101.00 AAA 3,682,812
5,750 6.000%, 7/01/24 7/09 at 101.00 AAA 6,223,915
10,000 New York State Housing Finance Agency, Housing Project 5/06 at 102.00 AAA 10,937,600
Mortgage Revenue Bonds, 1996 Series A Refunding,
6.125%, 11/01/20
6,095 New York State Medical Care Facilities Finance Agency, Mental 2/05 at 102.00 AAA 6,755,515
Health Services Facilities Improvement Revenue Bonds,
1995 Series A, 6.000%, 8/15/15 (Pre-refunded to 2/15/05)
New York State Medical Care Facilities Finance Agency, New York,
Hospital FHA-Insured Mortgage Revenue Bonds, Series 1994A:
3,000 6.750%, 8/15/14 (Pre-refunded to 2/15/05) 2/05 at 102.00 AAA 3,375,210
2,500 6.800%, 8/15/24 (Pre-refunded to 2/15/05) 2/05 at 102.00 AAA 2,815,450
New York State Urban Development Corporation, Correctional
Capital Facilities Revenue Bonds, Series 7:
3,505 5.700%, 1/01/27 1/07 at 102.00 AAA 3,765,982
5,000 5.700%, 1/01/27 1/07 at 102.00 AAA 5,364,750
------------------------------------------------------------------------------------------------------------------------------------
NORTH DAKOTA - 3.7%
10,715 City of Fargo, North Dakota, Health System Revenue Bonds, 6/10 at 101.00 AAA 11,231,142
MertiCare Obligated Group, Series 2000A, 5.600%, 6/01/21
8,000 State of North Dakota, Student Loan Revenue Bonds, 12/10 at 100.00 AAA 8,262,480
Series 2000B, 5.850%, 12/01/25 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
OKLAHOMA - 1.0%
Oklahoma City, Oklahoma, Airport Trust Junior Lien Bonds,
Twenty Seventh Series 2000A:
1,320 5.125%, 7/01/20 7/10 at 100.00 AAA 1,346,057
4,040 5.250%, 7/01/21 7/10 at 100.00 AAA 4,140,879
------------------------------------------------------------------------------------------------------------------------------------
OREGON - 3.6%
City of Portland, Oregon, Airport Way Urban Renewal and
Redevelopment Bonds, 2000 Series A:
4,405 5.700%, 6/15/17 6/10 at 101.00 Aaa 4,818,497
3,665 5.750%, 6/15/18 6/10 at 101.00 Aaa 4,007,311
4,265 5.750%, 6/15/19 6/10 at 101.00 Aaa 4,645,992
1,375 5.750%, 6/15/20 6/10 at 101.00 Aaa 1,494,116
Housing Authority of Portland, Oregon, Multifamily Housing
Revenue Bonds, Series 2000, Lovejoy Station Apartments Project:
1,500 5.900%, 7/01/23 (Alternative Minimum Tax) 7/10 at 100.00 Aaa 1,568,850
2,520 6.000%, 7/01/33 (Alternative Minimum Tax) 7/10 at 100.00 Aaa 2,631,359
------------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA - 5.7%
12,620 Allegheny County Hospital Development Authority, Pennsylvania, 11/10 at 102.00 AAA 14,459,996
Health System Insured Revenue Bonds, Series 2000A,
West Penn Allegheny Health System, 6.500%, 11/15/30
3,015 Allegheny County Residential Finance Authority, Pennsylvania, 11/06 at 102.00 Aaa 3,181,398
Single Family Mortgage Revenue Bonds, 1996 Series AA,
6.450%, 5/01/28 (Alternative Minimum Tax)
9,485 Berks County Municipal Authority, Pennsylvania, Hospital 11/09 at 102.00 AAA 11,261,066
Revenue Bonds (The Reading Hospital and Medical Center
Project), Series of 1999, 6.000%, 11/01/19 (Pre-refunded
to 11/01/09)
1,000 Luzerne County Industrial Development Authority, Pennsylvania, 12/04 at 102.00 AAA 1,116,410
Exempt Facilities Revenue Refunding Bonds, 1994 Series A
(Pennsylvania Gas and Water Company Project),
7.000%, 12/01/17 (Alternative Minimum Tax)
38
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA - 1.3%
$ 6,500 Piedmont Municipal Power Agency, South Carolina, Electric 1/03 at 102.00 AAA $ 6,679,985
Revenue Bonds, 1992 Refunding Series, 6.300%, 1/01/22
(Pre-refunded to 1/01/03)
------------------------------------------------------------------------------------------------------------------------------------
TEXAS - 16.7%
Brazos River Authority, Texas, Revenue Refunding Bonds
(Houston Industries Incorporated Project), Series 1998C:
10,000 5.125%, 5/01/19 5/08 at 102.00 AAA 10,423,200
9,000 5.125%, 11/01/20 (Optional put 11/01/08) 11/08 at 102.00 AAA 9,172,620
Cities of Dallas and Fort Worth, Texas, Dallas-Ft. Worth
International Airport, Joint Revenue Refunding and Improvement
Bonds, Series 2001A:
3,000 5.750%, 11/01/13 (Alternative Minimum Tax) 11/11 at 100.00 AAA 3,323,010
12,500 5.500%, 11/01/35 (Alternative Minimum Tax) 11/09 at 100.00 AAA 12,875,500
3,895 City of Denton, Texas, Utility System Revenue Bonds, 12/10 at 100.00 AAA 4,201,614
Series 2000A, 5.625%, 12/01/19
7,210 City of Houston, Texas, Water and Sewer System Junior Lien 12/07 at 101.00 AAA 7,357,012
Revenue Bonds, Series 1997A Refunding, 5.250%, 12/01/22
4,176 Panhandle Regional Housing Finance Corporation, Texas, 7/12 at 105.00 Aaa 4,812,047
Multifamily Housing Revenue Bonds, Ginnie Mae Collateralized
Mortgage - Renaissance of Amarillo Apartments, Series 2001A,
6.650%, 7/20/42
Tarrant County Health Facilities Development Corporation, Texas,
Hospital Revenue Bonds (Cook Children's Medical Center Project),
Series 2000A:
6,725 5.750%, 12/01/17 12/10 at 101.00 AAA 7,305,031
7,500 5.750%, 12/01/24 12/10 at 101.00 AAA 7,959,675
10,627 Tarrant County Housing Finance Corporation, Texas, Multifamily 10/11 at 105.00 Aaa 12,166,002
Housing Revenue Bonds, Series 2001, GNMA Collateralized
Mortgage Loan - Legacy Senior Residence Apartments
Project, 6.625%, 4/20/42
State of Texas, General Obligation Bonds, Veterans Housing
Assistance Program Fund, Series 1993:
1,315 6.800%, 12/01/23 (Alternative Minimum Tax) 12/03 at 102.00 Aa1 1,374,911
6,585 6.800%, 12/01/23 (Alternative Minimum Tax) 12/03 at 102.00 AAA 6,912,735
------------------------------------------------------------------------------------------------------------------------------------
UTAH - 3.6%
Intermountain Power Agency, Utah, Power Supply Revenue
Refunding Bonds, 1993 Series A:
4,970 5.500%, 7/01/20 7/03 at 102.00 AAA 5,180,032
4,595 5.500%, 7/01/20 7/03 at 102.00 AAA 4,692,138
3,600 Utah State Board of Regents, Student Loan Revenue Bonds, 11/03 at 102.00 Aaa 3,714,804
Series 1993B, 5.900%, 11/01/13 (Alternative Minimum Tax)
5,525 Utah Transit Authority, Sales Tax Revenue Bonds, 12/12 at 100.00 AAA 5,539,918
Series 2002A, 5.000%, 6/15/24
------------------------------------------------------------------------------------------------------------------------------------
VERMONT - 0.3%
1,320 Vermont Educational and Health Buildings Financing Agency, 12/10 at 101.00 AAA 1,445,638
Hospital Revenue Bonds (Fletcher Allen Health Care Project),
Series 2000A, 6.000%, 12/01/23
------------------------------------------------------------------------------------------------------------------------------------
VIRGINIA - 0.5%
2,250 Virginia Housing Development Authority, Multifamily Housing 1/08 at 102.00 AAA 2,395,755
Bonds, Series 1997B, 6.050%, 5/01/17 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
WASHINGTON - 12.4%
10,000 Public Utility District No. 1 of Chelan County, Washington, 7/11 at 101.00 AAA 10,415,800
Chelan Hydro Consolidated System Revenue Bonds,
Series 2001B, 5.600%, 1/01/36 (Alternative Minimum Tax)
1,370 Sedro-Wooley School District No. 101, Clark County, Washington, 12/12 at 100.00 Aaa 1,371,548
General Obligation Bonds, Series 2002, 5.000%, 12/01/22
(WI, settling 12/02/02)
5,230 Public Utility District No. 1 of Douglas County, Washington, 9/09 at 102.00 AAA 5,836,419
Wells Hydro-Electric Revenue Bonds, Series 1999A,
6.125%, 9/01/29 (Alternative Minimum Tax)
3,485 Public Utility District No. 2 of Grant County, Washington, 1/06 at 102.00 AAA 3,724,873
Priest Rapids Hydroelectric Development Revenue Bonds,
Second Series B of 1996, 5.900%, 1/01/21 (Alternative
Minimum Tax)
2,500 City of Tacoma, Washington, Sewer Revenue Bonds, 12/05 at 100.00 AAA 2,821,025
1995 Series B, 6.375%, 12/01/15 (Pre-refunded to 12/01/05)
39
Nuveen Insured Premium Income Municipal Fund 2 (NPX) (continued)
Portfolio of INVESTMENTS October 31, 2002
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
WASHINGTON (continued)
$ 8,100 Washington Health Care Facilities Authority, Seattle, Revenue 2/03 at 102.00 AAA $ 8,351,829
Bonds, Series 1992 (Virginia Mason Obligated Group),
6.300%, 2/15/17
Washington Public Power Supply System, Nuclear Project No. 1
Refunding Revenue Bonds, Series 1993B:
10 5.600%, 7/01/15 (Pre-refunded to 7/01/03) 7/03 at 102.00 AAA 10,462
3,740 5.600%, 7/01/15 7/03 at 102.00 AAA 3,888,927
10,455 Washington Public Power Supply System, Nuclear Project No. 1 7/03 at 102.00 AAA 10,879,682
Refunding Revenue Bonds, Series 1993A, 5.700%, 7/01/17
10,500 Washington Public Power Supply System, Nuclear Project No. 1 7/06 at 102.00 AAA 11,716,425
Refunding Revenue Bonds, Series 1996-A, 5.750%, 7/01/11
6,295 Washington Public Power Supply System, Nuclear Project No. 3 7/03 at 102.00 AAA 6,535,532
Refunding Revenue Bonds, Series 1993B, 5.600%, 7/01/17
------------------------------------------------------------------------------------------------------------------------------------
WEST VIRGINIA - 4.2%
20,000 County Commission of Pleasants County, West Virginia, Pollution 5/05 at 102.00 AAA 22,099,400
Control Revenue Bonds (Monongahela Power Company
Pleasants Station Project), 1995 Series C, 6.150%, 5/01/15
------------------------------------------------------------------------------------------------------------------------------------
WISCONSIN - 6.4%
7,000 La Crosse, Wisconsin, Resource Recovery Revenue Refunding No Opt. Call AAA 7,949,760
Bonds, Series 1996, Northern States Power Company Project,
6.000%, 11/01/21 (Alternative Minimum Tax)
12,750 Milwaukee County, Wisconsin, Airport Revenue Bonds, 12/10 at 100.00 Aaa 13,435,185
Series 2000A, 5.750%, 12/01/25 (Alternative Minimum Tax)
6,250 Wisconsin Health and Educational Facilities Authority, Revenue 8/06 at 102.00 AAA 6,623,374
Bonds, Series 1996 (Sinai Samaritan Medical Center, Inc.
Project), 5.750%, 8/15/16
5,000 Wisconsin Health and Educational Facilities Authority, Revenue 8/05 at 102.00 AAA 5,545,350
Bonds, Series 1995 (Mercy Health System Corporation),
6.125%, 8/15/13
------------------------------------------------------------------------------------------------------------------------------------
$ 761,783 Total Long-Term Investments (cost $715,711,108) - 145.9% 769,821,904
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 5.0% 26,877,751
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (50.9)% (268,900,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $527,799,655
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares.
All of the bonds in the portfolio are either covered by
Original Issue Insurance, Secondary Market Insurance or
Portfolio Insurance, or are backed by an escrow or trust
containing sufficient U.S. Government or U.S. Government
agency securities, any of which ensure the timely payment of
principal and interest.
* Optional Call Provisions (not covered by the report of
independent auditors): Dates (month and year) and
prices of the earliest optional call or redemption.
There may be other call provisions at varying prices at
later dates.
** Ratings (not covered by the report of independent
auditors): Using the higher of Standard & Poor's or
Moody's rating.
(DD) Security purchased on a delayed delivery basis.
(WI) Security purchased on a when-issued basis.
See accompanying notes to financial statements.
40
Nuveen Insured Dividend Advantage Municipal Fund (NVG)
Portfolio of
INVESTMENTS October 31, 2002
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
ALABAMA - 3.7%
$ 5,310 Athens, Alabama, Water and Sewer Revenue Warrants, 5/12 at 101.00 AAA $ 5,467,760
Series 2002, 5.300%, 5/01/32
10,000 Jefferson County, Alabama, Sewer Revenue Capital Improvement 2/09 at 101.00 AAA 11,277,400
Warrants, Series 1999-A, 5.375%, 2/01/36 (Pre-refunded
to 2/01/09)
------------------------------------------------------------------------------------------------------------------------------------
ALASKA - 3.3%
15,000 State of Alaska, International Airport System Revenue Bonds, 10/12 at 100.00 AAA 15,237,000
Series 2002B, 5.250%, 10/01/27
------------------------------------------------------------------------------------------------------------------------------------
ARIZONA - 1.1%
5,000 City of Phoenix Civic Improvement Corporation, Arizona, Airport 7/12 at 100.00 AAA 5,073,450
Revenue Bonds, Series 2002B Senior Lien, 5.250%, 7/01/32
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA - 11.0%
10,000 State of California, General Obligation Veterans Welfare Bonds, 12/08 at 101.00 AA- 10,358,100
Series 1997BH, 5.400%, 12/01/14 (Alternative Minimum Tax)
3,200 State of California, General Obligation Various Purpose Bonds, 9/10 at 100.00 AAA 3,383,808
5.250%, 9/01/17
State of California, General Obligation Bonds, Series 2002
Refunding:
10,000 5.000%, 2/01/23 No Opt. Call AAA 10,061,800
5,000 5.000%, 4/01/27 4/12 at 100.00 AAA 5,019,550
3,000 State of California, Veterans General Obligation Bonds, 6/07 at 101.00 AAA 3,035,580
2001 Series BZ, 5.375%, 12/01/24 (Alternative Minimum Tax)
7,935 City of Los Angeles, California, Certificates of Participation, 4/12 at 100.00 AAA 8,185,111
Real Property Acquisition Program, Series 2002, 5.300%, 4/01/32
7,500 Northern California Power Agency, Hydroelectric Project Number 7/08 at 101.00 AAA 7,632,225
One Revenue Bonds, 1998 Refunding Series A, 5.200%, 7/01/32
2,320 Sacramento Municipal Utility District, California, Electric 8/11 at 100.00 AAA 2,463,167
Revenue Bonds, Series 2001P, 5.250%, 8/15/18
------------------------------------------------------------------------------------------------------------------------------------
FLORIDA - 13.2%
11,600 Greater Orlando Aviation Authority, Florida, Airport Facilities 10/12 at 100.00 AAA 11,671,224
Revenue Bonds, Series 2002B, 5.125%, 10/01/21
(Alternative Minimum Tax)
10,000 JEA, Florida, Water and Sewer System Revenue Bonds, 4/07 at 100.00 AAA 10,356,800
Series 2002A, 5.500%, 10/01/41
8,155 Lee County, Florida, Solid Waste System Revenue Bonds, 10/11 at 100.00 Aaa 8,869,215
Series 2001 Refunding, 5.625%, 10/01/13 (Alternative
Minimum Tax)
Miami-Dade County, Florida, Aviation Revenue Bonds, Miami
International Airport, Series 2002:
7,165 5.625%, 10/01/15 (Alternative Minimum Tax) 10/12 at 100.00 AAA 7,776,318
5,600 5.750%, 10/01/16 (Alternative Minimum Tax) 10/12 at 100.00 AAA 6,110,272
10,000 5.125%, 10/01/21 (Alternative Minimum Tax) 10/12 at 100.00 AAA 10,015,000
2,000 5.250%, 10/01/22 (Alternative Minimum Tax) 10/12 at 100.00 AAA 2,020,700
3,370 School Board of Osceola County, Florida, Certificates of 6/12 at 101.00 Aaa 3,512,484
Participation, Series 2002A, 5.125%, 6/01/20
------------------------------------------------------------------------------------------------------------------------------------
GEORGIA - 0.4%
1,700 Georgia Housing and Finance Agency, Single Family Mortgage 12/11 at 100.00 AAA 1,743,894
Bonds, 2002 Series B-2, 5.500%, 6/01/32 (Alternative
Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
ILLINOIS - 22.4%
19,185 Village of Bolingbrook, Illinois, General Obligation Bonds, 1/12 at 100.00 AAA 19,743,092
Series 2002A, 5.375%, 1/01/38
5,000 City of Chicago, Illinois, General Obligation Bonds, Project and 1/11 at 101.00 AAA 5,213,400
Refunding Series 2001A, 5.500%, 1/01/38
41
Nuveen Insured Dividend Advantage Municipal Fund (NVG) (continued)
Portfolio of INVESTMENTS October 31, 2002
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
ILLINOIS (continued)
City of Chicago, Illinois, Chicago-O'Hare International Airport,
Second Lien Passenger Facility Charge Revenue Bonds, Series
2001C:
$ 4,250 5.500%, 1/01/16 (Alternative Minimum Tax) 1/11 at 101.00 AAA $ 4,492,463
4,485 5.500%, 1/01/17 (Alternative Minimum Tax) 1/11 at 101.00 AAA 4,706,828
4,730 5.500%, 1/01/18 (Alternative Minimum Tax) 1/11 at 101.00 AAA 4,935,424
2,930 5.500%, 1/01/19 (Alternative Minimum Tax) 1/11 at 101.00 AAA 3,046,292
3,000 City of Chicago, Illinois, Chicago-O'Hare International Airport, 1/12 at 100.00 AAA 3,237,990
General Airport Third Lien Revenue Refunding Bonds,
Series 2002A, 5.750%, 1/01/17 (Alternative Minimum Tax)
12,765 City of Chicago, Illinois, Skyway Toll Bridge Revenue Bonds, 1/07 at 102.00 AAA 13,218,923
Series 1996, 5.500%, 1/01/23
4,000 Town of Cicero, Cook County, Illinois, General Obligation Corporate 12/12 at 101.00 AAA 4,038,840
Purpose Bonds, Series 2002, 5.000%, 12/01/21
29,740 Illinois Educational Facilities Authority, Revenue Bonds, University 7/08 at 101.00 AAA 29,891,377
of Chicago, Series 1998A, 5.125%, 7/01/38
5,000 State of Illinois, General Obligation Bonds (Illinois FIRST), 4/12 at 100.00 AAA 5,132,450
Series 2002, 5.250%, 4/01/23
2,700 University of Illinois, Certificates of Participation, Utility 8/11 at 100.00 AAA 2,741,067
Infrastructure Projects, Series 2001A, 5.000%, 8/15/20
4,460 Will County School District No. 086, Joliet, Illinois, General No Opt. Call AAA 1,860,400
Obligation Bonds, Series 2002, 0.000%, 11/01/19
------------------------------------------------------------------------------------------------------------------------------------
INDIANA - 13.3%
Indiana Bond Bank, Special Program Bonds, 2002 Series D,
Hendricks County Redevelopment District:
2,500 5.375%, 4/01/23 4/12 at 100.00 AAA 2,580,050
7,075 5.250%, 4/01/26 4/12 at 100.00 AAA 7,214,236
7,000 5.250%, 4/01/30 4/12 at 100.00 AAA 7,127,190
10,000 Indiana Health Facility Financing Authority, Hospital Revenue 7/12 at 100.00 AAA 10,105,000
Bonds, Marion General Hospital Project, Series 2002,
5.250%, 7/01/32
25,000 Indianapolis Local Public Improvement Bond Bank, Indiana, 7/12 at 100.00 AAA 25,482,250
Series 2002A, Waterworks Project, 5.250%, 7/01/33
New Albany-Floyd County School Building Corporation, Indiana,
First Mortgage Bonds, Series 2002:
1,500 5.750%, 7/15/17 7/12 at 100.00 AAA 1,666,590
3,810 5.750%, 7/15/20 7/12 at 100.00 AAA 4,166,768
Northern Wells Community School Building Corporation, Wells
County, Indiana, First Mortgage Bonds, Series 2001:
420 5.250%, 1/15/19 7/12 at 100.00 AAA 439,975
430 5.250%, 7/15/19 7/12 at 100.00 AAA 450,451
1,675 5.400%, 7/15/23 7/12 at 100.00 AAA 1,734,362
------------------------------------------------------------------------------------------------------------------------------------
LOUISIANA - 0.7%
3,085 City of New Orleans, Louisiana, General Obligation Bonds, 9/12 at 100.00 AAA 3,154,628
Series 2002 Refunding, 5.125%, 9/01/21
------------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS - 6.9%
17,430 Massachusetts Development Finance Authority, Revenue Bonds, No Opt. Call AAA 19,971,294
Series 2002A, WGBH Educational Foundation, 5.750%, 1/01/42
11,005 Massachusetts Housing Finance Agency, Rental Housing Mortgage 7/12 at 100.00 AAA 11,396,998
Revenue Bonds, 2002 Series C, 5.600%, 1/01/45 (Alternative
Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
MINNESOTA - 0.7%
3,400 Bemidji, Minnesota, Health Care Facilities First Mortgage 9/12 at 100.00 AA 3,306,160
Revenue Bonds, North Country Health Services, Series 2002,
5.000%, 9/01/31 (DD, settling 11/01/02)
------------------------------------------------------------------------------------------------------------------------------------
MISSOURI - 2.0%
8,735 City of St. Louis, Missouri, Airport Revenue Bonds, Series 2001A, 7/11 at 100.00 AAA 8,926,471
Airport Development Program, 5.250%, 7/01/31
42
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
NEVADA - 4.1%
$ 9,810 Clark County School District, Nevada, General Obligation Bonds, 6/12 at 100.00 AAA $ 9,932,821
Series 2002C, 5.000%, 6/15/21
8,750 Truckee Meadows Water Authority, Nevada, Water Revenue 7/11 at 100.00 AAA 8,922,025
Bonds, Series 2001A, 5.250%, 7/01/34
------------------------------------------------------------------------------------------------------------------------------------
NEW YORK - 6.6%
20,000 Metropolitan Transportation Authority, New York, Transportation 11/12 at 100.00 AAA 20,085,800
Revenue Bonds, Series 2002A Refunding, 5.000%, 11/15/30
10,000 Triborough Bridge and Tunnel Authority, New York, General 1/12 at 100.00 AAA 10,032,200
Purpose Revenue Bonds, Series 2001A, 5.000%, 1/01/32
------------------------------------------------------------------------------------------------------------------------------------
OREGON - 4.0%
State of Oregon, General Obligation Veterans Welfare Bonds,
2002 Series 82:
11,375 5.375%, 12/01/31 12/11 at 100.00 AA 11,666,200
6,500 5.500%, 12/01/42 12/11 at 100.00 AA 6,703,515
------------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA - 2.2%
4,500 County of Allegheny, Pennsylvania, Airport Revenue Refunding No Opt. Call AAA 5,070,060
Bonds, Series 1997A (Pittsburgh International Airport),
5.750%, 1/01/13 (Alternative Minimum Tax)
5,000 Pennsylvania Higher Educational Facilities Authority, University 7/08 at 100.00 AAA 5,148,600
of Pennsylvania Revenue Bonds, Series 1998, 5.500%, 7/15/38
------------------------------------------------------------------------------------------------------------------------------------
TENNESSEE - 8.0%
10,000 Memphis and Shelby County Sports Authority, Inc., Tennessee, 11/12 at 100.00 AAA 10,087,200
Revenue Bonds, 2002 Series A, Memphis Arena Project,
5.125%, 11/01/28
11,000 Memphis and Shelby County Sports Authority, Inc., Tennessee, 11/12 at 100.00 AAA 11,095,920
Revenue Bonds, 2002 Series B, Memphis Arena Project,
5.125%, 11/01/29
15,195 Tennessee State School Bond Authority, Higher Educational 5/12 at 100.00 AAA 15,585,815
Facilities Bonds, Second Program, Series 2002A,
5.250%, 5/01/32
------------------------------------------------------------------------------------------------------------------------------------
TEXAS - 26.3%
7,165 Arlington Independent School District, Tarrrant County, Texas, 2/08 at 100.00 Aaa 7,048,425
General Obligation Bonds, Series 1998 Refunding,
4.750%, 2/15/21
3,500 Cities of Dallas and Fort Worth, Texas, Dallas-Ft. Worth 11/11 at 100.00 AAA 3,876,845
International Airport, Joint Revenue Refunding and Improvement
Bonds, Series 2001A, 5.750%, 11/01/13 (Alternative Minimum Tax)
10,000 Gainesville Hospital District, Texas, General Obligation Limited 8/11 at 100.00 AAA 10,291,200
Tax Bonds, Series 2002, 5.375%, 8/15/32
3,645 Galveston, Texas, General Obligation Bonds, Series 2001A No Opt. Call AAA 3,757,120
Refunding, 5.250%, 5/01/21
13,000 Houston Area Water Corporation, Texas, City of Houston Contract 3/12 at 100.00 AAA 13,075,790
Revenue Bonds, Northeast Water Purification Plant Project,
Series 2002, 5.125%, 3/01/32
2,500 Houston Higher Education Finance Corporation, Texas, Revenue 11/09 at 101.00 AAA 2,570,550
Bonds, Rice University Project, Series 1999A, 5.375%, 11/15/29
9,145 State of Texas, General Obligation Bonds, Veterans Housing 6/12 at 100.00 Aa1 9,271,750
Assistance Program Fund II, 2002 Series A-1, 5.250%, 12/01/22
(Alternative Minimum Tax)
7,500 Texas Department of Housing and Community Affairs, Residential 7/11 at 100.00 AAA 7,564,650
Mortgage Revenue Bonds, Series 2001A, 5.350%, 7/01/33
(Alternative Minimum Tax)
Texas Public Finance Authority, Revenue Financing System Bonds,
Series 2002, Texas Southern University:
3,520 5.125%, 11/01/20 5/12 at 100.00 Aaa 3,616,448
3,520 5.125%, 11/01/21 5/12 at 100.00 Aaa 3,589,485
8,910 Texas Department of Housing and Community Affairs, Single 3/12 at 100.00 AAA 9,103,258
Family Mortgage Bonds, 2002 Series B, 5.550%, 9/1/33
(Alternative Minimum Tax)
Texas Student Housing Authority, Austin, Texas, Student Housing
Revenue Bonds, Senior Series 2001A:
9,400 5.375%, 1/01/23 1/12 at 102.00 Aaa 9,775,718
11,665 5.500%, 1/01/33 1/12 at 102.00 Aaa 12,245,217
43
Nuveen Insured Dividend Advantage Municipal Fund (NVG) (continued)
Portfolio of INVESTMENTS October 31, 2002
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
TEXAS (continued)
$ 5,000 Texas Water Development Board, State Revolving Fund, Senior 1/10 at 100.00 AAA $ 5,270,700
Lien Revenue Bonds, Series 1999B, 5.250%, 7/15/17
Williamson County, Texas, General Obligation Road Bonds,
Series 2002:
3,500 5.200%, 2/15/21 2/12 at 100.00 AAA 3,596,285
3,000 5.250%, 2/15/22 2/12 at 100.00 AAA 3,080,760
7,340 5.250%, 2/15/23 2/12 at 100.00 AAA 7,521,078
5,000 5.250%, 2/15/25 2/12 at 100.00 AAA 5,112,100
------------------------------------------------------------------------------------------------------------------------------------
WASHINGTON - 12.5%
7,675 Energy Northwest, Washington, Project No. 1 Refunding Electric 7/12 at 100.00 AAA 8,444,572
Revenue Bonds, Series 2002A, 5.500%, 7/01/15
6,600 Energy Northwest, Washington, Columbia Generation Station 7/12 at 100.00 AAA 6,999,828
Electric Revenue Refunding Bonds, Series 2002B,
5.350%, 7/01/18
2,500 Port of Seattle, Washington, Revenue Bonds, Series 2002D 11/12 at 100.00 AAA 2,754,725
Refunding, 5.750%, 11/01/15 (Alternative Minimum Tax)
Washington State Economic Development Finance Authority,
Wastewater Revenue Bonds, LOTT Project, Series 2002:
2,000 5.500%, 6/01/17 6/12 at 100.00 Aaa 2,171,260
4,325 5.125%, 6/01/22 6/12 at 100.00 Aaa 4,371,148
17,630 Washington Health Care Facilities Authority, Revenue Bonds, 8/13 at 102.00 AAA 17,394,640
Series 1998 (Harrison Memorial Hospital), 5.000%, 8/15/28
10,000 Washington State Health Care Facilities Authority, Revenue 10/11 at 100.00 Aaa 10,013,700
Bonds, Children's Hospital and Regional Medical Center,
Series 2001, 5.125%, 10/01/31
5,170 Whitman County School District No. 267, Pullman, Washington, 6/12 at 100.00 Aaa 5,250,445
General Obligation Bonds, Series 2002, 5.000%, 12/01/20
------------------------------------------------------------------------------------------------------------------------------------
WISCONSIN - 6.1%
15,000 Wisconsin Housing and Economic Development Authority, 3/12 at 100.00 AA 15,175,500
Home Ownership Revenue Bonds, 2002 Series E,
5.250%, 9/01/22 (Alternative Minimum Tax)
11,950 State of Wisconsin, Transportation Revenue Bonds, 7/12 at 100.00 AAA 12,536,147
Series 2002-1 Refunding, 5.125%, 7/01/18
------------------------------------------------------------------------------------------------------------------------------------
$ 661,455 Total Long-Term Investments (cost $650,104,920) - 148.5% 679,061,327
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.4% 11,371,044
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (50.9)% (233,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $457,432,371
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares.
At least 80% of the Fund's net assets are invested in
municipal securities that are either covered by Original
Issue Insurance, Secondary Market Insurance or Portfolio
Insurance which ensures the timely payment of principal and
interest. Up to 20% of the Fund's net assets may be invested
in municipal securities that are (i) either backed by an
escrow or trust containing sufficient U.S. Government or
U.S. Government agency securities (also ensuring the timely
payment of principal and interest), or (ii) municipal bonds
that are rated, at the time of investment, within the four
highest grades (Baa or BBB or better by Moody's, S&P or
Fitch) or unrated but judged to be of comparable quality by
the Adviser.
* Optional Call Provisions (not covered by the report of
independent auditors): Dates (month and year) and
prices of the earliest optional call or redemption.
There may be other call provisions at varying prices at
later dates.
** Ratings (not covered by the report of independent
auditors): Using the higher of Standard & Poor's or
Moody's rating.
(DD) Security purchased on a delayed delivery basis.
See accompanying notes to financial statements.
44
Statement of
ASSETS AND LIABILITIES October 31, 2002
INSURED
INSURED INSURED PREMIER INSURED DIVIDEND
QUALITY OPPORTUNITY INSURED INCOME PREMIUM INCOME 2 ADVANTAGE
(NQI) (NIO) (NIF) (NPX) (NVG)
------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments in municipal securities,
at market value $926,184,951 $1,922,698,119 $442,807,750 $769,821,904 $679,061,327
Cash 13,487,039 18,709,739 11,725,395 6,650,584 4,681,231
Receivables:
Interest 13,235,284 30,128,494 7,742,672 14,195,496 10,979,253
Investments sold 11,706,030 28,034,007 13,431,832 12,748,977 --
Other assets 44,946 63,545 18,098 37,219 15,773
------------------------------------------------------------------------------------------------------------------------------------
Total assets 964,658,250 1,999,633,904 475,725,747 803,454,180 694,737,584
------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Payable for investments purchased 44,317,804 34,556,722 13,178,541 5,864,637 3,393,359
Accrued expenses:
Management fees 490,094 1,024,695 250,917 426,116 193,867
Organization and offering cost -- -- -- -- 618,292
Other 312,448 608,601 140,242 426,441 63,322
Preferred share dividends payable 42,806 90,687 34,726 37,331 36,373
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 45,163,152 36,280,705 13,604,426 6,754,525 4,305,213
------------------------------------------------------------------------------------------------------------------------------------
Preferred shares, at liquidation value 318,000,000 680,000,000 161,000,000 268,900,000 233,000,000
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $601,495,098 $1,283,353,199 $301,121,321 $527,799,655 $457,432,371
====================================================================================================================================
Common shares outstanding 37,894,714 81,060,946 19,313,362 37,253,959 29,807,822
====================================================================================================================================
Net asset value per Common share outstanding
(net assets applicable to Common
shares, divided by Common shares
outstanding) $ 15.87 $ 15.83 $ 15.59 $ 14.17 $ 15.35
====================================================================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
------------------------------------------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 378,947 $ 810,609 $ 193,134 $ 372,540 $ 298,078
Paid-in surplus 528,025,009 1,127,616,210 267,740,255 490,386,958 423,485,437
Undistributed net investment income 6,743,927 15,148,385 2,973,772 4,646,374 1,172,751
Accumulated net realized gain (loss) from
investments 4,946,243 10,506,200 717,756 (21,717,013) 3,519,698
Net unrealized appreciation of investments 61,400,972 129,271,795 29,496,404 54,110,796 28,956,407
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $601,495,098 $1,283,353,199 $301,121,321 $527,799,655 $457,432,371
====================================================================================================================================
Authorized shares:
Common 200,000,000 200,000,000 200,000,000 Unlimited Unlimited
Preferred 1,000,000 1,000,000 1,000,000 Unlimited Unlimited
====================================================================================================================================
See accompanying notes to financial statements.
45
Statement of
OPERATIONS Year Ended October 31, 2002
INSURED
INSURED INSURED PREMIER INSURED DIVIDEND
QUALITY OPPORTUNITY INSURED INCOME PREMIUM INCOME 2 ADVANTAGE
(NQI) (NIO) (NIF) (NPX) (NVG)*
------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME $49,711,350 $107,982,506 $25,596,439 $42,978,550 $18,123,167
------------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 5,658,929 11,833,850 2,902,248 4,914,267 2,337,264
Preferred shares - auction fees 795,000 1,700,000 402,500 672,250 268,110
Preferred shares - dividend disbursing agent fees 50,000 70,000 30,000 50,000 13,808
Shareholders' servicing agent fees and expenses 146,361 230,134 56,572 87,094 6,035
Custodian's fees and expenses 242,573 494,191 128,934 194,590 258,229
Directors'/Trustees' fees and expenses 8,777 18,669 4,699 7,774 4,842
Professional fees 28,455 52,150 16,877 24,626 11,942
Shareholders' reports - printing and mailing expenses 71,214 156,194 45,861 69,631 26,142
Stock exchange listing fees 19,368 38,140 19,623 19,368 --
Investor relations expense 113,205 226,810 57,187 99,901 --
Portfolio insurance expense 39,943 93,268 -- 22,191 --
Other expenses 52,325 95,951 28,014 37,918 1,967
------------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit
and expense reimbursement 7,226,150 15,009,357 3,692,515 6,199,610 2,928,339
Custodian fee credit (83,754) (92,684) (45,432) (42,843) (198,286)
Expense reimbursement -- -- -- -- (1,113,364)
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 7,142,396 14,916,673 3,647,083 6,156,767 1,616,689
------------------------------------------------------------------------------------------------------------------------------------
Net investment income 42,568,954 93,065,833 21,949,356 36,821,783 16,506,478
------------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS
Net realized gain from investments 4,974,138 11,512,148 1,473,037 5,701,469 3,519,698
Change in net unrealized appreciation
(depreciation) of investments (3,800,192) (10,056,251) (2,260,720) 159,715 28,956,407
------------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) from investments 1,173,946 1,455,897 (787,683) 5,861,184 32,476,105
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS
From net investment income (4,177,031) (8,962,116) (2,181,015) (3,630,320) (1,473,247)
From accumulated net realized gains from investments (252,858) (425,567) -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares
from distributions to Preferred shareholders (4,429,889) (9,387,683) (2,181,015) (3,630,320) (1,473,247)
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable to
Common shares from operations $39,313,011 $ 85,134,047 $18,980,658 $39,052,647 $47,509,336
====================================================================================================================================
* For the period March 25, 2002 (commencement of operations) through October
31, 2002.
See accompanying notes to financial statements.
46
Statement of
CHANGES IN NET ASSETS
INSURED QUALITY (NQI) INSURED OPPORTUNITY (NIO)
--------------------------------- ----------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
10/31/02 10/31/01 10/31/02 10/31/01
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 42,568,954 $ 44,506,740 $ 93,065,833 $ 95,205,068
Net realized gain from investments 4,974,138 8,468,012 11,512,148 16,381,120
Change in net unrealized appreciation (depreciation) of
investments (3,800,192) 36,864,158 (10,056,251) 67,267,115
Distributions to Preferred Shareholders:
From net investment income (4,177,031) (9,939,317) (8,962,116) (20,771,576)
From accumulated net realized gains from investments (252,858) -- (425,567) --
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable
to Common shares from operations 39,313,011 79,899,593 85,134,047 158,081,727
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (34,809,135) (32,021,289) (74,985,371) (70,123,691)
From accumulated net realized gains from investments (824,876) -- (1,454,843) --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares
from distributions to Common shareholders (35,634,011) (32,021,289) (76,440,214) (70,123,691)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from sale of shares -- -- -- --
Net proceeds from shares issued to shareholders
due to reinvestment of distributions 817,396 -- -- --
Preferred shares offering costs -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable to Common shares
from capital share transactions 817,396 -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable to Common shares 4,496,396 47,878,304 8,693,833 87,958,036
Net assets applicable to Common shares at the beginning of
period 596,998,702 549,120,398 1,274,659,366 1,186,701,330
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares at the end of
period $601,495,098 $596,998,702 $1,283,353,199 $1,274,659,366
====================================================================================================================================
Undistributed net investment income at the end of period $ 6,743,927 $ 2,703,243 $ 15,148,385 $ 5,025,893
====================================================================================================================================
See accompanying notes to financial statements.
47
Statement of
CHANGES IN NET ASSETS (continued)
PREMIER INSURED INCOME (NIF) INSURED PREMIUM INCOME 2 (NPX)
--------------------------------- ----------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
10/31/02 10/31/01 10/31/02 10/31/01
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 21,949,356 $ 22,824,656 $ 36,821,783 $ 37,492,888
Net realized gain from investments 1,473,037 5,002,925 5,701,469 3,787,085
Change in net unrealized appreciation (depreciation) of
investments (2,260,720) 11,314,431 159,715 28,376,973
Distributions to Preferred Shareholders:
From net investment income (2,181,015) (5,000,703) (3,630,320) (8,429,610)
From accumulated net realized gains from investments -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable
to Common shares from operations 18,980,658 34,141,309 39,052,647 61,227,336
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (18,123,654) (17,031,612) (30,549,239) (27,940,467)
From accumulated net realized gains from investments -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares
from distributions to Common shareholders (18,123,654) (17,031,612) (30,549,239) (27,940,467)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from sale of shares -- -- -- --
Net proceeds from shares issued to shareholders
due to reinvestment of distributions 610,174 -- -- --
Preferred shares offering costs -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable to Common shares
from capital share transactions 610,174 -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable to Common shares 1,467,178 17,109,697 8,503,408 33,286,869
Net assets applicable to Common shares at the beginning of
period 299,654,143 282,544,446 519,296,247 486,009,378
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares at the end of
period $301,121,321 $299,654,143 $527,799,655 $519,296,247
====================================================================================================================================
Undistributed net investment income at the end of period $ 2,973,772 $ 1,315,694 $ 4,646,374 $ 1,953,338
====================================================================================================================================
INSURED DIVIDEND
ADVANTAGE (NVG)
FOR THE
PERIOD
3/25/02
(COMMENCEMENT
OF OPERATIONS)
THROUGH
10/31/02
-------------------------------------------------------------------------
OPERATIONS
Net investment income $ 16,506,478
Net realized gain from investments 3,519,698
Change in net unrealized appreciation (depreciation) of
investments 28,956,407
Distributions to Preferred Shareholders:
From net investment income (1,473,247)
From accumulated net realized gains from investments --
-------------------------------------------------------------------------
Net increase in net assets applicable
to Common shares from operations 47,509,336
-------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (13,860,480)
From accumulated net realized gains from investments --
-------------------------------------------------------------------------
Decrease in net assets applicable to Common shares
from distributions to Common shareholders (13,860,480)
-------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from sale of shares 426,270,921
Net proceeds from shares issued to shareholders
due to reinvestment of distributions 12,436
Preferred shares offering costs (2,600,117)
-------------------------------------------------------------------------
Net increase in net assets applicable to Common shares
from capital share transactions 423,683,240
-------------------------------------------------------------------------
Net increase in net assets applicable to Common shares 457,332,096
Net assets applicable to Common shares at the beginning of
period 100,275
-------------------------------------------------------------------------
Net assets applicable to Common shares at the end of
period $457,432,371
=========================================================================
Undistributed net investment income at the end of period $ 1,172,751
=========================================================================
See accompanying notes to financial statements.
48
Notes to
FINANCIAL STATEMENTS
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
The National Funds (the "Funds") covered in this report and their corresponding
Common shares stock exchange symbols are Nuveen Insured Quality Municipal Fund,
Inc. (NQI), Nuveen Insured Municipal Opportunity Fund, Inc. (NIO), Nuveen
Premier Insured Municipal Income Fund, Inc. (NIF), Nuveen Insured Premium Income
Municipal Fund 2 (NPX) and Nuveen Insured Dividend Advantage Municipal Fund
(NVG). Insured Quality (NQI), Insured Opportunity (NIO), Premier Insured Income
(NIF) and Insured Premium Income 2 (NPX) are traded on the New York Stock
Exchange while Insured Dividend Advantage (NVG) is traded on the American Stock
Exchange.
Prior to the commencement of operations of Insured Dividend Advantage (NVG), the
Fund had no operations other than those related to organizational matters, the
initial capital contribution of $100,275 by Nuveen Advisory Corp. (the
"Adviser"), a wholly owned subsidiary of The John Nuveen Company, and the
recording of the organization expenses ($11,500) and its reimbursement by Nuveen
Investments, also a wholly owned subsidiary of The John Nuveen Company.
Each Fund seeks to provide current income exempt from regular federal income tax
by investing primarily in a diversified portfolio of municipal obligations
issued by state and local government authorities. The Funds are registered under
the Investment Company Act of 1940 as closed-end, diversified management
investment companies.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements in accordance with
accounting principles generally accepted in the United States.
Securities Valuation
The prices of municipal bonds in each Fund's investment portfolio are provided
by a pricing service approved by the Fund's Board of Directors/Trustees. When
price quotes are not readily available (which is usually the case for municipal
securities), the pricing service establishes fair market value based on yields
or prices of municipal bonds of comparable quality, type of issue, coupon,
maturity and rating, indications of value from securities dealers and general
market conditions. If it is determined that market prices for a security are
unavailable or inappropriate, the Board of Directors/Trustees of the Funds or
its designee may establish a fair value for the security. Temporary investments
in securities that have variable rate and demand features qualifying them as
short-term securities are valued at amortized cost, which approximates market
value.
Securities Transactions
Securities transactions are recorded on a trade date basis. Realized gains and
losses from such transactions are determined on the specific identification
method. Securities purchased or sold on a when-issued or delayed delivery basis
may have extended settlement periods. The securities so purchased are subject to
market fluctuation during this period. The Funds have instructed the custodian
to segregate assets in a separate account with a current value at least equal to
the amount of the when-issued and delayed delivery purchase commitments. At
October 31, 2002, Insured Quality (NQI), Insured Opportunity (NIO), Premier
Insured Income (NIF), Insured Premium Income 2 (NPX) and Insured Dividend
Advantage (NVG) had outstanding when-issued and delayed delivery purchase
commitments of $44,317,804, $34,556,722, $13,178,541, $5,864,637 and $3,393,359,
respectively.
Investment Income
Interest income, which includes the amortization of premiums and accretion of
discounts for financial reporting purposes, is recorded on an accrual basis.
Federal Income Taxes
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund
intends to comply with the requirements of the Internal Revenue Code applicable
to regulated investment companies and to distribute all of its net investment
income to its shareholders. Therefore, no federal income tax provision is
required. Furthermore, each Fund intends to satisfy conditions which will enable
interest from municipal securities, which is exempt from regular federal income
tax, to retain such tax-exempt status when distributed to shareholders of the
Funds. All monthly tax-exempt income dividends paid during the fiscal year ended
October 31, 2002, have been designated Exempt Interest Dividends.
49
Notes to
FINANCIAL STATEMENTS (continued)
Dividends and Distributions to Common Shareholders
Dividends from tax-exempt net investment income are declared and paid monthly.
Net realized capital gains and/or market discount from investment transactions,
if any, are distributed to shareholders not less frequently than annually.
Furthermore, capital gains are distributed only to the extent they exceed
available capital loss carryforwards.
Distributions to Common shareholders of tax-exempt net investment income, net
realized capital gains and/or market discount, if any, are recorded on the
ex-dividend date. The amount and timing of distributions are determined in
accordance with federal income tax regulations, which may differ from accounting
principles generally accepted in the United States. Accordingly, temporary
over-distributions as a result of these differences may occur and will be
classified as either distributions in excess of net investment income,
distributions in excess of net realized gains and/or distributions in excess of
net ordinary taxable income from investment transactions, where applicable.
Preferred Shares
The Funds have issued and outstanding $25,000 stated value Preferred shares.
Each Fund's Preferred shares are issued in more than one Series. The dividend
rate on each Series may change every seven days, as set pursuant to a dutch
auction process by the auction agent, and is payable at or near the end of each
rate period. The number of Preferred shares outstanding, by Series and in total,
for each Fund is as follows:
PREMIER INSURED INSURED
INSURED INSURED INSURED PREMIUM DIVIDEND
QUALITY OPPORTUNITY INCOME INCOME 2 ADVANTAGE
(NQI) (NIO) (NIF) (NPX) (NVG)
--------------------------------------------------------------------------------
Number of shares:
Series M 2,600 4,000 -- 2,080 3,160
Series T 2,600 4,000 -- 2,200 3,080
Series W 2,600 4,000 840 2,080 --
Series W2 -- 3,200 -- -- --
Series TH 2,320 4,000 2,800 2,200 3,080
Series TH2 -- 4,000 -- -- --
Series F 2,600 4,000 2,800 2,196 --
--------------------------------------------------------------------------------
Total 12,720 27,200 6,440 10,756 9,320
================================================================================
Effective May 17, 2002, Insured Dividend Advantage (NVG) issued 3,160 Series M,
3,080 Series T and 3,080 Series TH, $25,000 stated value Preferred shares.
Insurance
Insured Quality (NQI), Insured Opportunity (NIO), Premier Insured Income (NIF)
and Insured Premium Income 2 (NPX) invest in municipal securities which are
either covered by insurance or are backed by an escrow or trust account
containing sufficient U.S. Government or U.S. Government agency securities, both
of which ensure the timely payment of principal and interest.
Insured Dividend Advantage (NVG) invests at least 80% of its net assets in
municipal securities that are covered by insurance. The Fund may also invest up
to 20% of its net assets in municipal securities which are either (i) backed by
an escrow or trust containing sufficient U.S. Government or U.S. Government
agency securities, or (ii) municipal bonds that are rated, at the time of
investment, within the four highest grades (Baa or BBB or better by Moody's, S&P
or Fitch) or unrated but judged to be of comparable quality by the Adviser.
50
Each insured municipal security is covered by Original Issue Insurance,
Secondary Market Insurance or Portfolio Insurance. Such insurance does not
guarantee the market value of the municipal securities or the value of the
Funds' shares. Original Issue Insurance and Secondary Market Insurance remain in
effect as long as the municipal securities covered thereby remain outstanding
and the insurer remains in business, regardless of whether the Funds ultimately
dispose of such municipal securities. Consequently, the market value of the
municipal securities covered by Original Issue Insurance or Secondary Market
Insurance may reflect value attributable to the insurance. Portfolio Insurance
is effective only while the municipal securities are held by the Funds.
Accordingly, neither the prices used in determining the market value of the
underlying municipal securities nor the net asset value of the Funds' Common
shares include value, if any, attributable to the Portfolio Insurance. Each
policy of the Portfolio Insurance does, however, give the Funds the right to
obtain permanent insurance with respect to the municipal security covered by the
Portfolio Insurance policy at the time of its sale.
Derivative Financial Instruments
The Funds may invest in certain derivative financial instruments including
futures, forward, swap and option contracts, and other financial instruments
with similar characteristics. Although the Funds are authorized to invest in
such financial instruments, and may do so in the future, they did not make any
such investments during the period ended October 31, 2002.
Custodian Fee Credit
Each Fund has an arrangement with the custodian bank whereby certain custodian
fees and expenses are reduced by credits earned on each Fund's cash on deposit
with the bank. Such deposit arrangements are an alternative to overnight
investments.
Offering Costs
Nuveen Investments has agreed to pay all offering costs (other than the sales
load) that exceed $.03 per Common share for Insured Dividend Advantage (NVG).
Insured Dividend Advantage's (NVG) share of offering costs ($614,079) was
recorded as a reduction of the proceeds from the sale of Common shares.
Costs incurred by Insured Dividend Advantage (NVG) in connection with its
offering of Preferred shares ($2,600,117) were recorded as a reduction to
paid-in surplus.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of increases and
decreases in net assets applicable to Common shares from operations during the
reporting period. Actual results may differ from those estimates.
Change in Accounting Policy
As required, effective November 1, 2001, the following Funds have adopted the
provisions of the new AICPA Audit and Accounting Guide for Investment Companies
and began accreting taxable market discount on debt securities. Prior to
November 1, 2001, the Funds did not accrete taxable market discount on debt
securities until they were sold. The cumulative effect of this accounting change
had no impact on the total net assets applicable to Common shares or the Common
share net asset values of the Funds, but resulted in an increase in the cost of
securities and a corresponding decrease in net unrealized appreciation based on
securities held by the following Funds on November 1, 2001, as follows:
PREMIER INSURED
INSURED INSURED INSURED PREMIUM
QUALITY OPPORTUNITY INCOME INCOME 2
(NQI) (NIO) (NIF) (NPX)
--------------------------------------------------------------------------------
$462,342 $1,004,377 $29,696 $128,483
================================================================================
The Statement of Changes in Net Assets and Financial Highlights for the prior
periods have not been restated to reflect this change in presentation.
The net effect of this change for the fiscal year ended October 31, 2002, was to
increase investment income with a corresponding decrease in net unrealized
appreciation as follows:
PREMIER INSURED
INSURED INSURED INSURED PREMIUM
QUALITY OPPORTUNITY INCOME INCOME 2
(NQI) (NIO) (NIF) (NPX)
--------------------------------------------------------------------------------
$117,500 $284,081 $19,989 $44,294
================================================================================
51
Notes to
FINANCIAL STATEMENTS (continued)
Classification and Measurement of Redeemable Securities
The Funds have adopted the classification requirement of EITF D-98,
Classification and Measurement of Redeemable Securities. EITFD-98 requires that
Preferred shares, at liquidation value, be presented separately in the Statement
of Assets and Liabilities. Accordingly, certain reclassifications have been made
to the financial statements and financial highlights for all prior periods
presented. The adoption of EITF D-98 had no impact on the Funds' Common share
net asset values.
2. FUND SHARES
Transactions in Common and Preferred shares were as follows:
INSURED INSURED PREMIER INSURED
QUALITY (NQI) OPPORTUNITY (NIO) INCOME (NIF)
------------------- -------------------- ---------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
10/31/02 10/31/01 10/31/02 10/31/01 10/31/02 10/31/01
------------------------------------------------------------------------------------------------------------------
Common shares:
Shares sold -- -- -- -- -- --
Shares issued to shareholders
due to reinvestment of distributions 51,548 -- -- -- 39,202 --
------------------------------------------------------------------------------------------------------------------
51,548 -- -- -- 39,202 --
==================================================================================================================
Preferred shares sold -- -- -- -- -- --
==================================================================================================================
INSURED INSURED
PREMIUM INCOME 2 (NPX) DIVIDEND ADVANTAGE (NVG)
---------------------- -----------------------
FOR THE
PERIOD
3/25/02
(COMMENCEMENT
YEAR YEAR OF OPERATIONS)
ENDED ENDED THROUGH
10/31/02 10/31/01 10/31/02
------------------------------------------------------------------------------------------------------------------
Common shares:
Shares sold -- -- 29,800,000
Shares issued to shareholders
due to reinvestment of distributions -- -- 822
------------------------------------------------------------------------------------------------------------------
-- -- 29,800,822
==================================================================================================================
Preferred shares sold -- -- 9,320
==================================================================================================================
52
3. SECURITIES TRANSACTIONS
Purchases and sales (including maturities) of investments in long-term municipal
securities and short-term securities during the fiscal year ended October 31,
2002, were as follows:
PREMIER INSURED INSURED
INSURED INSURED INSURED PREMIUM DIVIDEND
QUALITY OPPORTUNITY INCOME INCOME 2 ADVANTAGE
(NQI) (NIO) (NIF) (NPX) (NVG)*
------------------------------------------------------------------------------------------------------------
Purchases:
Long-term municipal securities $416,766,761 $706,604,069 $195,722,624 $204,743,696 $776,000,618
Short-term securities 167,820,000 195,235,000 41,700,000 62,295,000 160,825,000
Sales and maturities:
Long-term municipal securities 398,185,631 759,085,764 204,355,912 218,940,914 129,525,542
Short-term securities 167,820,000 195,235,000 48,325,000 62,295,000 160,825,000
------------------------------------------------------------------------------------------------------------
* For the period March 25, 2002 (commencement of operations) through October
31, 2002.
4. INCOME TAX INFORMATION
The following information is presented on an income tax basis as of October 31,
2002. Differences between amounts for financial statement and federal income tax
purposes are primarily due to timing differences in recognizing income on
taxable market discount securities and timing differences in recognizing certain
gains and losses on security transactions.
PREMIER INSURED INSURED
INSURED INSURED INSURED PREMIUM DIVIDEND
QUALITY OPPORTUNITY INCOME INCOME 2 ADVANTAGE
(NQI) (NIO) (NIF) (NPX) (NVG)
-----------------------------------------------------------------------------------------------------------------------------
Cost of Investments $864,204,137 $1,793,133,469 $413,309,234 $715,628,686 $ 650,081,680
=============================================================================================================================
PREMIER INSURED INSURED
INSURED INSURED INSURED PREMIUM DIVIDEND
QUALITY OPPORTUNITY INCOME INCOME 2 ADVANTAGE
(NQI) (NIO) (NIF) (NPX) (NVG)
-----------------------------------------------------------------------------------------------------------------------------
Gross unrealized:
Appreciation $ 62,109,719 $ 130,539,682 $ 29,498,516 $ 54,317,127 $ 29,052,679
Depreciation (128,905) (975,032) -- (123,909) (73,032)
-----------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments $ 61,980,814 $ 129,564,650 $ 29,498,516 $ 54,193,218 $ 28,979,647
=============================================================================================================================
The tax components of undistributed net investment income and net realized gains
at October 31, 2002, were as follows:
PREMIER INSURED INSURED
INSURED INSURED INSURED PREMIUM DIVIDEND
QUALITY OPPORTUNITY INCOME INCOME 2 ADVANTAGE
(NQI) (NIO) (NIF) (NPX) (NVG)
-----------------------------------------------------------------------------------------------------------------------------
Undistributed tax-exempt income $ 9,238,467 $ 20,499,679 $ 4,517,140 $ 7,145,720 $ 3,495,989
Undistributed ordinary income * 538,152 410,238 22,665 51,966 3,519,698
Undistributed net long-term capital gains 4,408,091 11,027,375 739,056 -- --
=============================================================================================================================
* Ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
53
Notes to
FINANCIAL STATEMENTS (continued)
The tax character of distributions paid during the fiscal year ended October 31,
2002, were designated for purposes of the dividends paid deduction as follows:
PREMIER INSURED INSURED
INSURED INSURED INSURED PREMIUM DIVIDEND
QUALITY OPPORTUNITY INCOME INCOME 2 ADVANTAGE
(NQI) (NIO) (NIF) (NPX) (NVG)
-----------------------------------------------------------------------------------------------------------------------------
Distributions from tax-exempt income $38,550,143 $83,471,540 $20,196,415 $34,005,278 $12,987,249
Distributions from ordinary income * 123,801 5,439 -- -- --
Distributions from net long-term capital gains 1,077,734 1,880,410 -- -- --
=============================================================================================================================
* Ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
At October 31, 2002, the following Fund had unused capital loss carryforwards
available for federal income tax purposes to be applied against future capital
gains, if any. If not applied, the carryforwards will expire as follows:
INSURED
PREMIUM
INCOME 2
(NPX)
-------------------------------------------------------------------------------
Expiration year:
2003 $ 4,278,245
2004 2,080,786
2005 --
2006 --
2007 --
2008 15,327,981
-------------------------------------------------------------------------------
Total $21,687,012
===============================================================================
5. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the Funds' (excluding Insured Dividend Advantage (NVG)) investment
management agreements with the Adviser, each Fund pays an annual management fee,
payable monthly, at the rates set forth below, which are based upon the average
daily net assets (including net assets attributable to Preferred shares) of each
Fund as follows:
AVERAGE DAILY NET ASSETS (INCLUDING NET ASSETS ATTRIBUTABLE TO PREFERRED SHARES) MANAGEMENT FEE
-----------------------------------------------------------------------------------------------------------
For the first $125 million .6500%
For the next $125 million .6375
For the next $250 million .6250
For the next $500 million .6125
For the next $1 billion .6000
For the next $3 billion .5875
For net assets over $5 billion .5750
-----------------------------------------------------------------------------------------------------------
54
Under Insured Dividend Advantage's (NVG) investment management agreement with
the Adviser, the Fund pays an annual management fee, payable monthly, at the
rates set forth below, which are based upon the average daily net assets
(including net assets attributable to Preferred shares) of the Fund as follows:
AVERAGE DAILY NET ASSETS (INCLUDING NET ASSETS ATTRIBUTABLE TO PREFERRED SHARES) MANAGEMENT FEE
-----------------------------------------------------------------------------------------------------------
For the first $125 million .6500%
For the next $125 million .6375
For the next $250 million .6250
For the next $500 million .6125
For the next $1 billion .6000
For net assets over $2 billion .5750
-----------------------------------------------------------------------------------------------------------
For the first ten years of Insured Dividend Advantage's (NVG) operations, the
Adviser has agreed to reimburse the Fund, as a percentage of average daily net
assets (including net assets attributable to Preferred shares), for fees and
expenses in the amounts, and for the time periods set forth below:
YEAR ENDING YEAR ENDING
MARCH 31, MARCH 31,
--------------------------------------------------------------------------------
2002* .30% 2008 .25%
2003 .30 2009 .20
2004 .30 2010 .15
2005 .30 2011 .10
2006 .30 2012 .05
2007 .30
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse Insured Dividend Advantage (NVG) for any
portion of its fees and expenses beyond March 31, 2012.
The management fee compensates the Adviser for overall investment advisory and
administrative services and general office facilities. The Funds pay no
compensation directly to those of its Directors/Trustees who are affiliated with
the Adviser or to their officers, all of whom receive remuneration for their
services to the Funds from the Adviser.
6. INVESTMENT COMPOSITION
At October 31, 2002, the revenue sources by municipal purpose, expressed as a
percent of total investments, were as follows:
PREMIER INSURED INSURED
INSURED INSURED INSURED PREMIUM DIVIDEND
QUALITY OPPORTUNITY INCOME INCOME ADVANTAGE
(NQI) (NIO) (NIF) (NPX) (NVG)
-------------------------------------------------------------------------------------------------------------
Education and Civic Organizations 3% 3% 2% 3% 15%
Healthcare 16 12 15 12 6
Housing/Multifamily 8 3 4 10 2
Housing/Single Family 3 10 3 3 5
Tax Obligation/General 12 6 12 8 23
Tax Obligation/Limited 8 11 14 11 10
Transportation 20 22 20 15 21
U.S. Guaranteed 11 13 19 8 2
Utilities 14 10 10 26 5
Water and Sewer 5 10 -- 4 11
Other -- -- 1 -- --
-------------------------------------------------------------------------------------------------------------
100% 100% 100% 100% 100%
=============================================================================================================
55
Notes to
FINANCIAL STATEMENTS (continued)
Certain investments owned by the Funds are either covered by insurance issued by
several private insurers or are backed by an escrow or trust containing U.S.
Government or U.S. Government agency securities, both of which ensure the timely
payment of principal and interest in the event of default (100% for Insured
Quality (NQI), 100% for Insured Opportunity (NIO), 100% for Premier Insured
Income (NIF), 100% for Insured Premium Income 2 (NPX) and 86% for Insured
Dividend Advantage (NVG)).
For additional information regarding each investment security, refer to the
Portfolio of Investments of each Fund.
7. SUBSEQUENT EVENT - DISTRIBUTIONS TO COMMON SHAREHOLDERS
The Funds declared Common share dividend distributions from their tax-exempt net
investment income which were paid on December 2, 2002, to shareholders of record
on November 15, 2002, as follows:
PREMIER INSURED INSURED
INSURED INSURED INSURED PREMIUM DIVIDEND
QUALITY OPPORTUNITY INCOME INCOME 2 ADVANTAGE
(NQI) (NIO) (NIF) (NPX) (NVG)
-----------------------------------------------------------------------------------------------------------
Dividend per share $.0800 $.0800 $.0805 $.0705 $.0775
===========================================================================================================
56
Financial
HIGHLIGHTS
57
Financial
HIGHLIGHTS
Selected data for a Common share outstanding throughout each period:
Investment Operations
--------------------------------------------------------------------------
Distributions Distributions
from Net from
Beginning Net Investment Capital
Common Realized/ Income to Gains to
Share Net Unrealized Preferred Preferred
Net Asset Investment Investment Share- Share-
Value Income Gain (Loss) holders+ holders+ Total
======================================================================================================
INSURED QUALITY (NQI)
------------------------------------------------------------------------------------------------------
Year Ended 10/31:
2002(a) $15.78 $1.12 $ .03 $(.11) $(.01) $ 1.03
2001 14.51 1.18 1.20 (.26) -- 2.12
2000 13.95 1.20 .60 (.34) -- 1.46
1999 16.02 1.17 (1.91) (.22) (.04) (1.00)
1998 15.68 1.18 .36 (.25) -- 1.29
INSURED OPPORTUNITY (NIO)
------------------------------------------------------------------------------------------------------
Year Ended 10/31:
2002(a) 15.72 1.15 .03 (.11) (.01) 1.06
2001 14.64 1.17 1.04 (.26) -- 1.95
2000 14.25 1.21 .39 (.33) -- 1.27
1999 16.04 1.18 (1.73) (.24) (.01) (.80)
1998 15.78 1.21 .28 (.26) -- 1.23
PREMIER INSURED INCOME (NIF)
------------------------------------------------------------------------------------------------------
Year Ended 10/31:
2002(a) 15.55 1.14 (.05) (.11) -- .98
2001 14.66 1.18 .85 (.26) -- 1.77
2000 14.25 1.20 .43 (.33) -- 1.30
1999 16.18 1.16 (1.89) (.23) (.01) (.97)
1998 15.84 1.16 .38 (.25) (.01) 1.28
INSURED PREMIUM INCOME 2 (NPX)
------------------------------------------------------------------------------------------------------
Year Ended 10/31:
2002(a) 13.94 .99 .16 (.10) -- 1.05
2001 13.05 1.01 .86 (.23) -- 1.64
2000 12.40 .99 .66 (.29) -- 1.36
1999 14.10 .97 (1.71) (.23) -- (.97)
1998 13.60 .95 .53 (.25) -- 1.23
INSURED DIVIDEND ADVANTAGE (NVG)
------------------------------------------------------------------------------------------------------
Year Ended 10/31:
2002(b) 14.33 .55 1.10 (.05) -- 1.60
======================================================================================================
Less Distributions
-------------------------------------------
Net Offering
Investment Capital Costs and Ending
Income to Gains to Preferred Common
Common Common Share Share Ending
Share- Share- Underwriting Net Asset Market
holders holders Total Discounts Value Value
====================================================================================================================================
INSURED QUALITY (NQI)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 10/31:
2002(a) $(.92) $(.02) $ (.94) $ -- $15.87 $15.5500
2001 (.85) -- (.85) -- 15.78 14.9200
2000 (.90) -- (.90) -- 14.51 13.6875
1999 (.92) (.13) (1.05) (.02) 13.95 13.1875
1998 (.94) (.01) (.95) -- 16.02 15.6250
INSURED OPPORTUNITY (NIO)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 10/31:
2002(a) (.93) (.02) (.95) -- 15.83 15.2100
2001 (.87) -- (.87) -- 15.72 14.7400
2000 (.88) -- (.88) -- 14.64 13.0625
1999 (.94) (.04) (.98) (.01) 14.25 13.3125
1998 (.97) -- (.97) -- 16.04 16.6250
PREMIER INSURED INCOME (NIF)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 10/31:
2002(a) (.94) -- (.94) -- 15.59 15.3300
2001 (.88) -- (.88) -- 15.55 15.2500
2000 (.89) -- (.89) -- 14.66 13.5000
1999 (.90) (.04) (.94) (.02) 14.25 13.1250
1998 (.92) (.02) (.94) -- 16.18 16.8750
INSURED PREMIUM INCOME 2 (NPX)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 10/31:
2002(a) (.82) -- (.82) -- 14.17 13.7700
2001 (.75) -- (.75) -- 13.94 13.7500
2000 (.71) -- (.71) -- 13.05 11.2500
1999 (.73) -- (.73) -- 12.40 11.5000
1998 (.73) -- (.73) -- 14.10 13.6875
INSURED DIVIDEND ADVANTAGE (NVG)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 10/31:
2002(b) (.47) -- (.47) (.11) 15.35 14.9600
====================================================================================================================================
Total Returns
----------------
Based
on
Based Common
on Share Net
Market Asset
Value** Value**
========================================================
INSURED QUALITY (NQI)
--------------------------------------------------------
Year Ended 10/31:
2002(a) 10.82% 6.83%
2001 15.53 14.94
2000 10.94 10.86
1999 (9.65) (6.77)
1998 6.13 8.43
INSURED OPPORTUNITY (NIO)
--------------------------------------------------------
Year Ended 10/31:
2002(a) 9.80 7.01
2001 19.84 13.61
2000 5.06 9.25
1999 (14.71) (5.33)
1998 12.03 7.99
PREMIER INSURED INCOME (NIF)
--------------------------------------------------------
Year Ended 10/31:
2002(a) 6.84 6.57
2001 19.97 12.40
2000 9.92 9.41
1999 (17.33) (6.42)
1998 14.06 8.35
INSURED PREMIUM INCOME 2 (NPX)
--------------------------------------------------------
Year Ended 10/31:
2002(a) 6.32 7.83
2001 29.46 12.85
2000 4.35 11.35
1999 (11.16) (7.21)
1998 16.35 9.28
INSURED DIVIDEND ADVANTAGE (NVG)
--------------------------------------------------------
Year Ended 10/31:
2002(b) 2.84 10.44
========================================================
Ratios/Supplemental Data
--------------------------------------------------------------------------------------
Before Credit/Reimbursement After Credit/Reimbursement***
--------------------------- -----------------------------
Ratio of Net Ratio of Net
Ratio of Investment Ratio of Investment
Ending Expenses Income to Expenses Income to
Net to Average Average to Average Average
Assets Net Assets Net Assets Net Assets Net Assets
Applicable Applicable Applicable Applicable Applicable Portfolio
to Common to Common to Common to Common to Common Turnover
Shares (000) Shares++ Shares++ Shares++ Shares++ Rate
==============================================================================================================================
INSURED QUALITY (NQI)
------------------------------------------------------------------------------------------------------------------------------
Year Ended 10/31:
2002(a) $ 601,495 1.23% 7.22% 1.21% 7.24% 44%
2001 596,999 1.24 7.72 1.23 7.74 34
2000 549,120 1.24 8.48 1.23 8.49 24
1999 527,789 1.19 7.67 1.18 7.67 27
1998 603,179 1.13 7.49 1.13 7.49 16
INSURED OPPORTUNITY (NIO)
------------------------------------------------------------------------------------------------------------------------------
Year Ended 10/31:
2002(a) 1,283,353 1.20 7.42 1.19 7.42 37
2001 1,274,659 1.21 7.69 1.20 7.70 39
2000 1,186,701 1.20 8.47 1.20 8.48 16
1999 1,155,516 1.16 7.67 1.16 7.67 26
1998 1,292,589 1.13 7.60 1.13 7.60 12
PREMIER INSURED INCOME (NIF)
------------------------------------------------------------------------------------------------------------------------------
Year Ended 10/31:
2002(a) 301,121 1.25 7.40 1.23 7.42 43
2001 299,654 1.26 7.79 1.24 7.81 34
2000 282,544 1.26 8.37 1.24 8.39 21
1999 274,668 1.19 7.49 1.18 7.50 32
1998 310,466 1.16 7.29 1.16 7.29 10
INSURED PREMIUM INCOME 2 (NPX)
------------------------------------------------------------------------------------------------------------------------------
Year Ended 10/31:
2002(a) 527,800 1.20 7.13 1.19 7.14 26
2001 519,296 1.22 7.39 1.20 7.41 27
2000 486,009 1.22 7.87 1.20 7.88 55
1999 461,955 1.21 7.11 1.21 7.11 35
1998 524,962 1.20 6.89 1.20 6.89 31
INSURED DIVIDEND ADVANTAGE (NVG)
------------------------------------------------------------------------------------------------------------------------------
Year Ended 10/31:
2002(b) 457,432 1.10* 5.71* .61* 6.20* 22
==============================================================================================================================
Preferred Shares at End of Period
------------------------------------------
Aggregate Liquidation
Amount and Market Asset
Outstanding Value Coverage
(000) Per Share Per Share
=================================================================================
INSURED QUALITY (NQI)
---------------------------------------------------------------------------------
Year Ended 10/31:
2002(a) $318,000 $25,000 $72,287
2001 318,000 25,000 71,934
2000 318,000 25,000 68,170
1999 318,000 25,000 66,493
1998 260,000 25,000 82,998
INSURED OPPORTUNITY (NIO)
---------------------------------------------------------------------------------
Year Ended 10/31:
2002(a) 680,000 25,000 72,182
2001 680,000 25,000 71,862
2000 680,000 25,000 68,629
1999 680,000 25,000 67,482
1998 600,000 25,000 78,858
PREMIER INSURED INCOME (NIF)
---------------------------------------------------------------------------------
Year Ended 10/31:
2002(a) 161,000 25,000 71,758
2001 161,000 25,000 71,530
2000 161,000 25,000 68,873
1999 161,000 25,000 67,650
1998 140,000 25,000 80,440
INSURED PREMIUM INCOME 2 (NPX)
---------------------------------------------------------------------------------
Year Ended 10/31:
2002(a) 268,900 25,000 74,070
2001 268,900 25,000 73,280
2000 268,900 25,000 70,185
1999 268,900 25,000 67,949
1998 268,900 25,000 73,806
INSURED DIVIDEND ADVANTAGE (NVG)
---------------------------------------------------------------------------------
Year Ended 10/31:
2002(b) 233,000 25,000 74,081
=================================================================================
* Annualized.
** Total Investment Return on Market Value is the combination of reinvested
dividend income, reinvested capital gains distributions, if any, and
changes in stock price per share. Total Return on Common Share Net Asset
Value is the combination of reinvested dividend income, reinvested capital
gains distributions, if any, and changes in Common share net asset value
per share. Total returns are not annualized.
*** After custodian fee credit and expense reimbursement, where applicable.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders; income ratios reflect income earned on assets attributable to
Preferred shares, where applicable.
(a) As required, effective November 1, 2001, the Funds have adopted the
provisions of the new AICPA Audit and Accounting Guide for Investment
Companies and began accreting taxable market discount on debt securities.
The net effect of this change for the fiscal year ended October 31, 2002,
was to increase net investment income per share with a corresponding
decrease in net realized/unrealized investment gain (loss) per share and
increase each ratio of net investment income to average net assets
applicable to Common shares as follows:
PREMIER INSURED
INSURED INSURED INSURED PREMIUM
QUALITY OPPORTUNITY INCOME INCOME 2
(NQI) (NIO) (NIF) (NPX)
------------------------------------------
2002 per share impact ($) -- -- -- --
2002 income ratio impact (%) .02 .02 .01 .01
The Financial Highlights for the prior periods have not been restated to
reflect this change in presentation.
(b) For the period March 25, 2002 (commencement of operations) through October
31, 2002.
See accompanying notes to financial statements.
58-59
Directors/Trustees
AND OFFICERS
The management of the Funds, including general supervision of the duties
performed for the Funds under the Management Agreement, is the responsibility of
the Board of Directors/Trustees of the Funds. The number of directors/trustees
of the Funds is currently set at seven, one of whom is an "interested person"
(as the term is defined in the Investment Company Act of 1940) and six of whom
are not interested persons. None of the directors/trustees who are not
interested persons of the Funds have ever been a director or employee of, or
consultant to, Nuveen or its affiliates. The names and business addresses of the
directors/trustees and officers of the Funds, their principal occupations and
other affiliations during the past five years, the number of portfolios each
oversees and other directorships they hold are set forth below.
NUMBER
OF FUNDS
IN NUVEEN
YEAR FIRST COMPLEX
ELECTED OR OVERSEEN
APPOINTED PRINCIPAL OCCUPATION(S) BY
NAME, BIRTHDATE POSITION(S) HELD AND TERM OF INCLUDING OTHER DIRECTORSHIPS DIRECTOR/
AND ADDRESS WITH THE FUND OFFICE (A) DURING PAST 5 YEARS TRUSTEE
------------------------------------------------------------------------------------------------------------------------------------
DIRECTOR/TRUSTEE WHO IS AN INTERESTED PERSON OF THE FUNDS:
------------------------------------------------------------------------------------------------------------------------------------
TIMOTHY R. SCHWERTFEGER (1) Chairman of the 1994 Chairman and Director (since 1996) of The John 141
3/28/1949 Board and Term: Nuveen Company, Nuveen Investments, Nuveen
333 W. Wacker Drive Director/Trustee one year (2) Advisory Corp. and Nuveen Institutional Advisory
Chicago, IL 60606 Corp.; Chairman and Director (since 1997) of
Nuveen Asset Management Inc.; Director (since
1996) of Institutional Capital Corporation;
Chairman and Director (since 1999) of Rittenhouse
Financial Services Inc.
DIRECTORS/TRUSTEES WHO ARE NOT INTERESTED PERSONS OF THE FUNDS:
------------------------------------------------------------------------------------------------------------------------------------
ROBERT P. BREMNER Director/Trustee 1997 Private Investor and Management Consultant. 122
8/22/1940 Term:
333 W. Wacker Drive one year (2)
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
LAWRENCE H. BROWN Director/Trustee 1993 Retired (1989) as Senior Vice President of The 122
7/29/1934 Term: Northern Trust Company.
333 W. Wacker Drive one year (2)
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
ANNE E. IMPELLIZZERI Director/Trustee 1994 Retired (2002); formerly, Executive Director 122
1/26/1933 Term: (since 1998) of Manitoga (Center for Russel
333 W. Wacker Drive one year (2) Wright's Design with Nature); prior thereto,
Chicago, IL 60606 President and Chief Executive Officer of
Blanton-Peale Institutes of Religion and Health;
prior thereto, Vice President, Metropolitan Life
Insurance Co.
------------------------------------------------------------------------------------------------------------------------------------
PETER R. SAWERS Director/Trustee 1991 Adjunct Professor of Business and Economics, 122
4/3/1933 Term: University of Dubuque, Iowa; Director, Executive
333 W. Wacker Drive one year (2) Service Corps of Chicago (not-for-profit); Director,
Chicago, IL 60606 Hadley School for the Blind (not-for-profit);
formerly (1991-2000) Adjunct Professor, Lake Forest
Graduate School of Management, Lake Forest,
Illinois; prior thereto, Executive Director,
Towers Perrin Australia, a management consulting
firm; Chartered Financial Analyst; Certified
Management Consultant.
60
NUMBER
OF FUNDS
IN NUVEEN
YEAR FIRST COMPLEX
ELECTED OR OVERSEEN
APPOINTED PRINCIPAL OCCUPATION(S) BY
NAME, BIRTHDATE POSITION(S) HELD AND TERM OF INCLUDING OTHER DIRECTORSHIPS DIRECTOR/
AND ADDRESS WITH THE FUND OFFICE (A) DURING PAST 5 YEARS TRUSTEE
------------------------------------------------------------------------------------------------------------------------------------
DIRECTORS/TRUSTEES WHO ARE NOT INTERESTED PERSONS OF THE FUNDS (CONTINUED):
------------------------------------------------------------------------------------------------------------------------------------
WILLIAM J. SCHNEIDER Director/Trustee 1997 Senior Partner and Chief Operating Officer, 122
9/24/1944 Term: Miller-Valentine Group, Vice President,
333 W. Wacker Drive one year (2) Miller-Valentine Realty, a construction company;
Chicago, IL 60606 Chair, Miami Valley Hospital; Vice Chair, Dayton
Development Coalition; formerly, Member,
Community Advisory Board, National City Bank,
Dayton, Ohio; and Business Advisory Council,
Cleveland Federal Reserve Bank.
------------------------------------------------------------------------------------------------------------------------------------
JUDITH M. STOCKDALE Director/Trustee 1997 Executive Director, Gaylord and Dorothy 122
12/29/1947 Term: Donnelley Foundation (since 1994); prior
333 W. Wacker Drive one year (2) thereto, Executive Director, Great Lakes
Chicago, IL 60606 Protection Fund (from 1990 to 1994).
NUMBER
OF FUNDS
YEAR FIRST IN NUVEEN
ELECTED OR PRINCIPAL OCCUPATION(S) COMPLEX
NAME, BIRTHDATE POSITION(S) HELD APPOINTED INCLUDING OTHER DIRECTORSHIPS OVERSEEN
AND ADDRESS WITH THE FUND (B) DURING PAST 5 YEARS BY OFFICER
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUNDS:
------------------------------------------------------------------------------------------------------------------------------------
MICHAEL T. ATKINSON Vice President 2002 Vice President (since January 2002), formerly, 141
2/3/1966 Assistant Vice President (since 2000), previously,
333 W. Wacker Drive Associate of Nuveen Investments.
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
PAUL L. BRENNAN Vice President 2002 Vice President (since January 2002), formerly, 135
11/10/1966 Assistant Vice President of Nuveen
333 W. Wacker Drive Advisory Corp.
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
PETER H. D'ARRIGO Vice President and 1999 Vice President of Nuveen Investments (since 141
11/28/1967 Treasurer 1999), prior thereto, Assistant Vice President
333 W. Wacker Drive (from 1997); Chartered Financial Analyst.
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
SUSAN M. DESANTO Vice President 2001 Vice President of Nuveen Advisory Corp. (since 141
9/8/1954 2001); previously, Vice President of Van Kampen
333 W. Wacker Drive Investment Advisory Corp. (since 1998); prior
Chicago, IL 60606 thereto, Assistant Vice President of Van Kampen
Investment Advisory Corp.
------------------------------------------------------------------------------------------------------------------------------------
JESSICA R. DROEGER Vice President 2002 Vice President (since January 2002), Assistant 141
9/24/1964 and Secretary General Counsel and Assistant Secretary (since
333 W. Wacker Drive 1998), formerly Assistant Vice President of Nuveen
Chicago, IL 60606 Investments; Vice President (since January 2002)
and Assistant Secretary (since 1998), formerly
Assistant Vice President of Nuveen Advisory Corp.
and Nuveen Institutional Advisory Corp.; prior thereto,
Associate at the law firm D'Ancona Partners LLC.
61
Directors/Trustees
AND OFFICERS (continued)
NUMBER
OF FUNDS
YEAR FIRST IN NUVEEN
ELECTED OR PRINCIPAL OCCUPATION(S) COMPLEX
NAME, BIRTHDATE POSITION(S) HELD APPOINTED INCLUDING OTHER DIRECTORSHIPS OVERSEEN
AND ADDRESS WITH THE FUND (B) DURING PAST 5 YEARS BY OFFICER
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUNDS (CONTINUED):
------------------------------------------------------------------------------------------------------------------------------------
LORNA C. FERGUSON Vice President 1998 Vice President of Nuveen Investments; Vice 141
10/24/1945 President (since 1998) of Nuveen Advisory Corp.
333 W. Wacker Drive and Nuveen Institutional Advisory Corp.
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
WILLIAM M. FITZGERALD Vice President 1995 Managing Director (since January 2002) of Nuveen 141
3/2/1964 Investments; Managing Director of Nuveen Advisory
333 W. Wacker Drive Corp. and Nuveen Institutional Advisory Corp. (since
Chicago, IL 60606 2001); prior thereto, Vice President of Nuveen
Advisory Corp.; Chartered Financial Analyst.
------------------------------------------------------------------------------------------------------------------------------------
STEPHEN D. FOY Vice President and 1998 Vice President of Nuveen Investments and 141
5/31/1954 Controller (since 1998) The John Nuveen Company;
333 W. Wacker Drive Certified Public Accountant.
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
J. THOMAS FUTRELL Vice President 1992 Vice President of Nuveen Advisory Corp.; 135
7/5/1955 Chartered Financial Analyst.
333 W. Wacker Drive
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
RICHARD A. HUBER Vice President 1997 Vice President of Nuveen Institutional Advisory 135
3/26/1963 Corp. (since 1998) and Nuveen Advisory Corp.
333 W. Wacker Drive
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
STEVEN J. KRUPA Vice President 1990 Vice President of Nuveen Advisory Corp. 135
8/21/1957
333 W. Wacker Drive
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
DAVID J. LAMB Vice President 2000 Vice President (since 2000) of Nuveen Investments, 141
3/22/1963 previously Assistant Vice President (since 1999);
333 W. Wacker Drive prior thereto, Associate of Nuveen Investments;
Chicago, IL 60606 Certified Public Accountant.
------------------------------------------------------------------------------------------------------------------------------------
TINA M. LAZAR Vice President 2002 Vice President (since 1999), previously, 141
8/27/1961 Assistant Vice President (since 1993) of
333 W. Wacker Drive Nuveen Investments.
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
LARRY W. MARTIN Vice President and 1992 Vice President, Assistant Secretary and 141
7/27/1951 Assistant Secretary Assistant General Counsel of Nuveen
333 W. Wacker Drive Investments; Vice President and Assistant
Chicago, IL 60606 Secretary of Nuveen Advisory Corp. and Nuveen
Institutional Advisory Corp.; Vice President and
Assistant Secretary of The John Nuveen
Company and Nuveen Asset Management, Inc.
62
NUMBER
OF FUNDS
YEAR FIRST IN NUVEEN
ELECTED OR PRINCIPAL OCCUPATION(S) COMPLEX
NAME, BIRTHDATE POSITION(S) HELD APPOINTED INCLUDING OTHER DIRECTORSHIPS OVERSEEN
AND ADDRESS WITH THE FUND (B) DURING PAST 5 YEARS BY OFFICER
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUNDS (CONTINUED):
------------------------------------------------------------------------------------------------------------------------------------
EDWARD F. NEILD, IV Vice President 1996 Managing Director (since January 2002) of Nuveen 141
7/7/1965 Investments; Managing Director (since 1997) of
333 W. Wacker Drive Nuveen Advisory Corp. and Nuveen Institutional
Chicago, IL 60606 Advisory Corp.; Chartered Financial Analyst.
------------------------------------------------------------------------------------------------------------------------------------
THOMAS J. O'SHAUGHNESSY Vice President 2002 Vice President (since January 2002), formerly, 135
9/4/1960 Assistant Vice President (since 1998) of Nuveen
333 W. Wacker Drive Advisory Corp.; prior thereto, Portfolio Manager.
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
THOMAS C. SPALDING Vice President 1990 Vice President of Nuveen Advisory Corp. and 135
7/31/1951 Nuveen Institutional Advisory Corp.; Chartered
333 W. Wacker Drive Financial Analyst.
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
GIFFORD R. ZIMMERMAN Chief 1992 Managing Director (since January 2002, formerly 141
9/9/1956 Administrative Vice President), Assistant Secretary and Associate
333 W. Wacker Drive Officer General Counsel (formerly Assistant General Counsel)
Chicago, IL 60606 of Nuveen Investments; Managing Director (since
January 2002, formerly Vice President) and
Assistant Secretary of Nuveen Advisory Corp. and
Nuveen Institutional Advisory Corp.; Vice President
and Assistant Secretary of The John Nuveen
Company; Chartered Financial Analyst.
(a) Year First Elected or Appointed is the year presented or each Fund's
respective inception date if later.
(b) Year First Elected or Appointed is the year presented or each Fund's
respective inception date if later. Officers serve one year terms through
July of each year.
(1) Mr. Schwertfeger is an "interested person" of the Funds, as defined in the
Investment Company Act of 1940, because he is an officer and director of
Nuveen Advisory Corp.
(2) Directors/Trustees are elected each year by shareholders and serve a one
year term until his/her successor is elected.
63
Build Your Wealth
AUTOMATICALLY
SIDEBAR TEXT:
NUVEEN MAKES
REINVESTING EASY.
A PHONE CALL IS
ALL IT TAKES TO
SET UP YOUR
REINVESTMENT
ACCOUNT.
NUVEEN CLOSED-END EXCHANGE-TRADED FUNDS DIVIDEND REINVESTMENT PLAN
Your Nuveen Closed-End Exchange-Traded Fund allows you to conveniently reinvest
dividends and/or capital gains distributions in additional fund shares.
By choosing to reinvest, you'll be able to invest money regularly and
automatically, and watch your investment grow through the power of tax-free
compounding. Just like dividends or distributions in cash, there may be times
when income or capital gains taxes may be payable on dividends or distributions
that are reinvested.
It is important to note that an automatic reinvestment plan does not ensure a
profit, nor does it protect you against loss in a declining market.
EASY AND CONVENIENT
To make recordkeeping easy and convenient, each month you'll receive a statement
showing your total dividends and distributions, the date of investment, the
shares acquired and the price per share, and the total number of shares you own.
HOW SHARES ARE PURCHASED
The shares you acquire by reinvesting will either be purchased on the open
market or newly issued by the Fund. If the shares are trading at or above net
asset value at the time of valuation, the Fund will issue new shares at the
then-current market price. If the shares are trading at less than net asset
value, shares for your account will be purchased on the open market. Dividends
and distributions received to purchase shares in the open market will normally
be invested shortly after the dividend payment date. No interest will be paid on
dividends and distributions awaiting reinvestment. Because the market price of
shares may increase before purchases are completed, the average purchase price
per share may exceed the market price at the time of valuation, resulting in the
acquisition of fewer shares than if the dividend or distribution had been paid
in shares issued by the Fund. A pro rata portion of any applicable brokerage
commissions on open market purchases will be paid by Plan participants. These
commissions usually will be lower than those charged on individual transactions.
FLEXIBILITY
You may change your distribution option or withdraw from the Plan at any time,
should your needs or situation change. Should you withdraw, you can receive a
certificate for all whole shares credited to your reinvestment account and cash
payment for fractional shares, or cash payment for all reinvestment account
shares, less brokerage commissions and a $2.50 service fee.
You can reinvest whether your shares are registered in your name, or in the name
of a brokerage firm, bank, or other nominee. Ask your investment advisor if his
or her firm will participate on your behalf. Participants whose shares are
registered in the name of one firm may not be able to transfer the shares to
another firm and continue to participate in the Plan.
The Fund reserves the right to amend or terminate the Plan at any time. Although
the Fund reserves the right to amend the Plan to include a service charge
payable by the participants, there is no direct service charge to participants
in the Plan at this time.
For more information on the Nuveen Automatic Reinvestment Plan or to enroll in
or withdraw from the Plan, speak with your financial advisor or call us at (800)
257-8787.
64
Fund
INFORMATION
BOARD OF DIRECTORS
Robert P. Bremner
Lawrence H. Brown
Anne E. Impellizzeri
Peter R. Sawers
William J. Schneider
Timothy R. Schwertfeger
Judith M. Stockdale
FUND MANAGER
Nuveen Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
CUSTODIAN
State Street Bank & Trust
Boston, MA
TRANSFER AGENT AND
SHAREHOLDER SERVICES
State Street Bank &Trust
Nuveen Funds
P.O. Box 43071
Providence, RI 02940-3071
(800) 257-8787
LEGAL COUNSEL
Morgan, Lewis &
Bockius LLP
Washington, D.C.
INDEPENDENT AUDITORS
Ernst & Young LLP
Chicago, IL
GLOSSARY OF TERMS USED IN THIS REPORT
AVERAGE ANNUAL TOTAL RETURN: This is a commonly used method to express an
investment's performance over a particular, usually multi-year time period. It
expresses the return (including change in NAV and reinvested dividends) that
would have been necessary on an annual basis to equal the investment's actual
performance over the time period being considered.
AVERAGE EFFECTIVE MATURITY: The average of all the maturities of the bonds in a
fund's portfolio, computed by weighting each maturity date (the date the
security comes due) by the market value of the security. This figure does not
account for the likelihood of prepayments or the exercise of call provisions.
LEVERAGE-ADJUSTED DURATION: Duration is a measure of a bond or bond fund's
sensitivity to changes in interest rates. Generally, the longer a bond or fund's
duration, the more the price of the bond or fund will change as interest rates
change. Leverage-adjusted duration takes into account the leveraging process for
a Fund and therefore is generally longer than the duration of the actual
portfolio of individual bonds that make up the Fund
MARKET YIELD (ALSO KNOWN AS DIVIDEND YIELD OR CURRENT YIELD): An investment's
current annualized dividend divided by its current market price.
NET ASSET VALUE (NAV): A fund's NAV is calculated by subtracting the liabilities
of the fund from its total assets and then dividing the remainder by the number
of shares outstanding. Fund NAVs are calculated at the end of each business day.
TAXABLE-EQUIVALENT YIELD: The yield necessary from a fully taxable investment to
equal, on an after-tax basis, the yield of a municipal bond investment.
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Each Fund intends to repurchase shares of its own common or preferred stock in
the future at such times and in such amounts as is deemed advisable. No shares
were repurchased during the twelve-month period ended October 31, 2002. Any
future repurchases will be reported to shareholders in the next annual or
semiannual report.
65
Serving Investors
FOR GENERATIONS
PHOTO OF:John Nuveen, Sr.
For over a century, generations of Americans have relied on Nuveen Investments
to help them grow and keep the money they've earned. Financial advisors,
investors and their families have associated Nuveen Investments with quality,
expertise and dependability since 1898. That is why financial advisors have
entrusted the assets of more than 1.3 million investors to Nuveen.
With the know-how that comes from a century of experience, Nuveen continues to
build upon its reputation for quality. Now, financial advisors and investors can
count on Nuveen Investments to help them design customized solutions that meet
the far-reaching financial goals unique to family wealth strategies - solutions
that can translate into legacies.
To find out more about how Nuveen Investments' products and services can help
you preserve your financial security, talk with your financial advisor, or call
us at (800) 257-8787 for more information, including a prospectus where
applicable. Please read that information carefully before you invest.
Logo: NUVEEN Investments
Nuveen Investments o 333 West Wacker Drive
Chicago, IL 60606 o www.nuveen.com EAN-D-1002D